Surprisingly small: effects of “generous” social benefits on re-employment of (quasi-) jobless households

Abstract

AbstractThis article analyses whether the extent of public welfare provision influences the speed at which (quasi-)jobless households get (back) into employment. (Quasi-)joblessness is one of the key criteria defining the risk of poverty and social exclusion in the EU. Moreover, the perceived tension between the main functions of social benefits (protecting households from poverty and incentivising job search) is most acute among these households. Based on EU-SILC data, we examine changes of household work intensity during one year after benefit receipt. We observe that “more-generous” social benefits have a slightly negative impact. This can potentially be due to a disincentive effect of social benefits, but it can also mean that the additional financial leeway is used by job seekers to wait for more adequate job offers or engage in further training. Even though statistically significant, the estimated negative effects are very small.