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The disparate effects of information provision: A field experiment on the work incentives of social welfare

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  • Cairo, Sofie
  • Mahlstedt, Robert

Abstract

Recipients of transfer payments must navigate intricate rules and regulations governing their incentives. This complexity carries the risk of prompting them to make privately suboptimal decisions and may, in turn, reduce overall welfare. Combining data from a large-scale scale field experiment and detailed administrative records, we investigate the labor market effects of informing social welfare recipients about their work incentives resulting from a minimum work requirement. Our intervention employs two treatments that provide (1) personalized and continually updated information on the relevant number of hours individuals have worked in the past and (2) generic information about the general rules governing their incentives. We find that the labor supply effects of these treatments differ significantly depending on individuals’ personal situation at the start of the experiment. While the provision of personalized information increases employment among individuals who have not yet worked the required number of hours, generic notifications reduce the labor supply of those who face a low personal risk of financial sanctions due to non-compliance with the requirement in the near future.

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  • Cairo, Sofie & Mahlstedt, Robert, 2023. "The disparate effects of information provision: A field experiment on the work incentives of social welfare," Journal of Public Economics, Elsevier, vol. 226(C).
    • Handle: RePEc:eee:pubeco:v:226:y:2023:i:c:s004727272300169x
    DOI: 10.1016/j.jpubeco.2023.104987
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    2. Paukkeri, Tuuli & Ravaska, Terhi, 2024. "Labour supply responses to reducing the risk of losing disability insurance benefits," Working Papers 163, VATT Institute for Economic Research.

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    More about this item

    Keywords

    Social welfare; Unemployment; Labor supply; Field experiments; Sanctions; Work requirements; Information interventions;
    All these keywords.

    JEL classification:

    • J68 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Public Policy
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments

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