IDEAS home Printed from https://ideas.repec.org/a/kap/decono/v165y2017i1d10.1007_s10645-017-9292-9.html
   My bibliography  Save this article

Do Incentives for Municipalities Reduce the Welfare Caseload? Evaluation of a Welfare Reform in the Netherlands

Author

Listed:
  • Lucy Kok

    (University of Amsterdam)

  • Caren Tempelman

    (University of Amsterdam)

  • Pierre Koning

    (VU University Amsterdam
    Leiden University
    Tinbergen Institute
    IZA)

  • Lennart Kroon

    (University of Amsterdam)

  • Caroline Berden

    (Dutch Healthcare Authority)

Abstract

Since 2004, most municipalities in the Netherlands receive lump sum payments from the state for the payment of social assistance allowances. As municipalities had no authority to change the eligibility rules for social assistance, the effects of the welfare reform are solely due to the efforts of municipalities to decrease the number of welfare recipients. Using variation in the timing of policy changes, this paper uses a difference-in-difference approach to assess the effectiveness of the incentive for municipalities. Based on individual panel data from administrative records, we show that the high-powered scheme led to a decline of the welfare caseload of 14% up till 2008. The reform has been most effective for those with the highest welfare dependency: single mothers and singles from non-western origin. In line with standard economic predictions, the reform does not give an incentive for cream skimming: the welfare caseload declined as well for easy to place recipients as for difficult to place recipients.

Suggested Citation

  • Lucy Kok & Caren Tempelman & Pierre Koning & Lennart Kroon & Caroline Berden, 2017. "Do Incentives for Municipalities Reduce the Welfare Caseload? Evaluation of a Welfare Reform in the Netherlands," De Economist, Springer, vol. 165(1), pages 23-42, March.
    • Handle: RePEc:kap:decono:v:165:y:2017:i:1:d:10.1007_s10645-017-9292-9
    DOI: 10.1007/s10645-017-9292-9
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s10645-017-9292-9
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s10645-017-9292-9?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. James J. Heckman & Carolyn Heinrich & Jeffrey Smith, 2002. "The Performance of Performance Standards," Journal of Human Resources, University of Wisconsin Press, vol. 37(4), pages 778-811.
    2. Linda Toolsema & Maarten Allers, 2014. "Welfare Financing: Grant Allocation and Efficiency," De Economist, Springer, vol. 162(2), pages 147-166, June.
    3. David C. Ribar & Mark O. Wilhelm, 1999. "The Demand for Welfare Generosity," The Review of Economics and Statistics, MIT Press, vol. 81(1), pages 96-108, February.
    4. Jonneke Bolhaar & Nadine Ketel & Bas van der Klaauw, 2019. "Job Search Periods for Welfare Applicants: Evidence from a Randomized Experiment," American Economic Journal: Applied Economics, American Economic Association, vol. 11(1), pages 92-125, January.
    5. Simon Burgess & Marisa Ratto, 2003. "The Role of Incentives in the Public Sector: Issues and Evidence," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 19(2), pages 285-300, Summer.
    6. James J. Heckman & Jeffrey A. Smith, 1999. "The Pre-Program Earnings Dip and the Determinants of Participation in a Social Program: Implications for Simple Program Evaluation Strategies," NBER Working Papers 6983, National Bureau of Economic Research, Inc.
    7. Marike Knoef & Jan C. van Ours, 2016. "How to stimulate single mothers on welfare to find a job: evidence from a policy experiment," Journal of Population Economics, Springer;European Society for Population Economics, vol. 29(4), pages 1025-1061, October.
    8. Martin L. Weitzman, 1980. "The "Ratchet Principle" and Performance Incentives," Bell Journal of Economics, The RAND Corporation, vol. 11(1), pages 302-308, Spring.
    9. Pierre Koning & Carolyn J. Heinrich, 2013. "Cream‐Skimming, Parking and Other Intended and Unintended Effects of High‐Powered, Performance‐Based Contracts," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 32(3), pages 461-483, June.
    10. Jeffrey Grogger, 2004. "Time Limits and Welfare Use," Journal of Human Resources, University of Wisconsin Press, vol. 39(2).
    11. Carolyn J. Heinrich & Gerald Marschke, 2010. "Incentives and their dynamics in public sector performance management systems," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 29(1), pages 183-208.
    12. Haider, Steven J. & Klerman, Jacob Alex, 2005. "Dynamic properties of the welfare caseload," Labour Economics, Elsevier, vol. 12(5), pages 629-648, October.
    13. Ashenfelter, Orley C, 1978. "Estimating the Effect of Training Programs on Earnings," The Review of Economics and Statistics, MIT Press, vol. 60(1), pages 47-57, February.
    14. Willem Adema, 2006. "Social Assistance Policy Development and the Provision of a Decent Level of Income in Selected OECD Countries," OECD Social, Employment and Migration Working Papers 38, OECD Publishing.
    15. Howard Chernick, 1998. "Fiscal Effects of Block Grants for the Needy: An Interpretation of the Evidence," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 5(2), pages 205-233, May.
    16. Simon Burgess & Marisa Ratto, 2003. "The Role of Incentives in the Public Sector: Issues and Evidence," The Centre for Market and Public Organisation 03/071, The Centre for Market and Public Organisation, University of Bristol, UK.
    17. Katherine Baicker, 2005. "Extensive or Intensive Generosity? The Price and Income Effects of Federal Grants," The Review of Economics and Statistics, MIT Press, vol. 87(2), pages 371-384, May.
    18. Heckman, James J & Smith, Jeffrey A, 1999. "The Pre-programme Earnings Dip and the Determinants of Participation in a Social Programme. Implications for Simple Programme Evaluation Strategies," Economic Journal, Royal Economic Society, vol. 109(457), pages 313-348, July.
    19. Robert Gibbons, 1996. "Incentives and Careers in Organizations," NBER Working Papers 5705, National Bureau of Economic Research, Inc.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Mörk, Eva & Ottosson, Lillit & Vikman, Ulrika, 2021. "To work or not to work? Effects of temporary public employment on future employment and benefits," Working Paper Series 2021:12, IFAU - Institute for Evaluation of Labour Market and Education Policy.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Fredrik Andersson & Harry J. Holzer & Julia I. Lane & David Rosenblum & Jeffrey Smith, 2024. "Does Federally Funded Job Training Work? Nonexperimental Estimates of WIA Training Impacts Using Longitudinal Data on Workers and Firms," Journal of Human Resources, University of Wisconsin Press, vol. 59(4), pages 1244-1283.
    2. Pierre Koning & C.J. Heinrich, 2009. "Cream-skimming, parking and other intended and unintended effects of performance-based contracting in social welfare services," CPB Discussion Paper 134, CPB Netherlands Bureau for Economic Policy Analysis.
    3. Gabrielle Wills, 2016. "Principal leadership changes in South Africa: Investigating their consequences for school performance," Working Papers 01/2016, Stellenbosch University, Department of Economics.
    4. Dietrichson, Jens, 2013. "Coordination Incentives, Performance Measurement and Resource Allocation in Public Sector Organizations," Working Papers 2013:26, Lund University, Department of Economics.
    5. Peter Bäckström & Erika Sandow & Olle Westerlund, 2016. "Commuting and timing of retirement," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 56(1), pages 125-152, January.
    6. Stenberg, Anders & Westerlund, Olle, 2016. "Flexibility at a cost – Should governments stimulate tertiary education for adults?," The Journal of the Economics of Ageing, Elsevier, vol. 7(C), pages 69-86.
    7. Pascal Courty & Gerald Marschke, 2003. "Making Government Accountable: Lessons from a Federal Job Training Program," The Centre for Market and Public Organisation 03/083, The Centre for Market and Public Organisation, University of Bristol, UK.
    8. Katherine Baicker & Theodore Svoronos, 2019. "Testing the Validity of the Single Interrupted Time Series Design," NBER Working Papers 26080, National Bureau of Economic Research, Inc.
    9. Anders Stenberg & Xavier Luna & Olle Westerlund, 2014. "Does Formal Education for Older Workers Increase Earnings? — Evidence Based on Rich Data and Long-term Follow-up," LABOUR, CEIS, vol. 28(2), pages 163-189, June.
    10. Regner, Hakan, 2002. "A nonexperimental evaluation of training programs for the unemployed in Sweden," Labour Economics, Elsevier, vol. 9(2), pages 187-206, April.
    11. Lechner Michael & Miquel Ruth & Wunsch Conny, 2007. "The Curse and Blessing of Training the Unemployed in a Changing Economy: The Case of East Germany After Unification," German Economic Review, De Gruyter, vol. 8(4), pages 468-509, December.
    12. Robert S. Chirinko & Daniel J. Wilson, 2023. "Job Creation Tax Credits, Fiscal Foresight, and Job Growth: Evidence from US States," National Tax Journal, University of Chicago Press, vol. 76(3), pages 481-523.
    13. Reinowski, Eva & Schultz, Birgit & Wiemers, Jürgen, 2004. "Evaluation of Further Training Programmes in Saxony from 1989 to 2001," IWH Discussion Papers 188/2004, Halle Institute for Economic Research (IWH), revised 2004.
    14. Toolsema-Veldman, Linda & Allers, M.A., 2012. "Welfare financing," Research Report 12004-EEF, University of Groningen, Research Institute SOM (Systems, Organisations and Management).
    15. Raphael W. Bostic & Allen C. Prohofsky, 2006. "Enterprise Zones and Individual Welfare: A Case Study of California," Journal of Regional Science, Wiley Blackwell, vol. 46(2), pages 175-203, May.
    16. Mario Liebensteiner, 2014. "Estimating the Income Gain of Seasonal Labor Migration," Review of Development Economics, Wiley Blackwell, vol. 18(4), pages 667-680, November.
    17. Pirog, Maureen & Gerrish, Ed, 2015. "Impact of the Child Support Performance and Incentive Act on child support order establishment," Children and Youth Services Review, Elsevier, vol. 58(C), pages 104-117.
    18. Martins, Pedro S., 2017. "Can Non-Cognitive Skills Programs Improve Achievement? Quasi-Experimental Evidence from EPIS," GLO Discussion Paper Series 105, Global Labor Organization (GLO).
    19. Robert S. Chirinko & Daniel J. Wilson, 2023. "Fiscal Foresight and Perverse Distortions to Firm Behavior: Anticipatory Dips and Compensating Rebounds," Working Paper Series 2021-15, Federal Reserve Bank of San Francisco.
    20. Apeti, Ablam Estel & N’Doua, Bossoma Doriane, 2023. "The impact of timber regulations on timber and timber product trade," Ecological Economics, Elsevier, vol. 213(C).

    More about this item

    Keywords

    Decentralisation; Welfare caseload; Financial incentive; Principal agent;
    All these keywords.

    JEL classification:

    • H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • H75 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Government: Health, Education, and Welfare

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kap:decono:v:165:y:2017:i:1:d:10.1007_s10645-017-9292-9. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.