Do Generous Earnings Exemptions Stimulate Welfare Claimants to Find a Job? Evidence From a Field Experiment in the Netherlands

34 Pages Posted: 9 May 2023

See all articles by Timo Verlaat

Timo Verlaat

CPB Netherlands Bureau of Economic Policy Analysis; Utrecht University - School of Economics

Stephanie Rosenkranz

Utrecht University - School of Economics

Loek F. M. Groot

Utrecht University - School of Economics

Mark Sanders

Maastricht University

Date Written: May 7, 2023

Abstract

Using a field experiment in the Netherlands, we study the labor market and the budgetary effects of a more generous earnings exemption policy. The policy allowed claimants to keep more earnings for a longer time. In line with expectations, we find positive effects on employment, almost entirely driven by part-time work. We also find improvements in claimants' income situation. Full-time employment appears unaffected both during the treatment period and post-treatment. Lastly, we find no evidence for effects on welfare expenditures. Our findings suggest that slight changes to financial work incentives can be an effective policy if one wishes to stimulate part-time work among benefit recipients. Different incentives are needed to promote full-time exit and self-suffciency.

Keywords: welfare, social assistance, policy evaluation, earnings disregard, benefit reduction rate, RCT

JEL Classification: C93, H53, I38

Suggested Citation

Verlaat, Timo and Rosenkranz, Stephanie and Groot, Loek F. M. and Sanders, Mark, Do Generous Earnings Exemptions Stimulate Welfare Claimants to Find a Job? Evidence From a Field Experiment in the Netherlands (May 7, 2023). Available at SSRN: https://ssrn.com/abstract=4440531 or http://dx.doi.org/10.2139/ssrn.4440531

Timo Verlaat (Contact Author)

CPB Netherlands Bureau of Economic Policy Analysis ( email )

P.O. Box 80510
2508 GM The Hague, 2585 JR
Netherlands

HOME PAGE: http://https://www.cpb.nl/medewerkers/timo-verlaat

Utrecht University - School of Economics ( email )

Kriekenpitplein 21-22
Adam Smith Building
Utrecht, 3584 EC
Netherlands

HOME PAGE: http://https://www.uu.nl/medewerkers/TLLVerlaat

Stephanie Rosenkranz

Utrecht University - School of Economics ( email )

Kriekenpitplein 21-22
Adam Smith Building
Utrecht, 3584 EC
Netherlands
+31 30 253 9806 (Phone)
+31 30 253 7373 (Fax)

HOME PAGE: http://www.uu.nl/uupublish/defaculteit/persoonlijkepagi/rosenkranz/

Loek F. M. Groot

Utrecht University - School of Economics ( email )

Kriekenpitplein 21-22
Adam Smith Building
Utrecht, 3584 EC
Netherlands

Mark Sanders

Maastricht University ( email )

P.O. Box 616
Maastricht, Limburg 6200MD
Netherlands

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