From Welfare to Work : Financial Incentives, Active Labor Market Policies, and Integration Programs

Abstract: Essay I: I study the effects of increased social assistance (SA) generosity by exploiting exogenous variation induced by a ruling in the Swedish Supreme Administrative Court in 1993, mandating local governments to provide a minimum level of untied SA payments. The new rule forced some local governments to increase their SA generosity, while others were unaffected as they already complied with the stricter standards. I find that a 1 percent increase in SA generosity caused an increase in SA recipiency by 1.3 percent and a decrease in employment by 0.2 percent, among individuals with a high risk of receiving SA. For individuals who were already recipients of SA, the increase in SA payments was not offset by lower labor earnings, resulting in increased disposable income.