| Description: |
This paper investigates whether work requirements has effects on welfare participation, employment and disposable income. To identify a causal effect, we make use of an exogenous variation that was generated by the gradual implementation of a welfare reform in the town districts in the city of Stockholm. The reform implies that the town districts introduced work requirements for individuals on welfare, and is very suitable for examining the question at hand for two reasons. First, the reform was clean in the sense that no other policy instruments, like time limits or tax credits, were introduced at the same time, implying that we are able to estimate the direct effects of work requirements. Second, the reforms were initiated at different time points in different town districts, which will ease identification. Overall, we find that work requirements decrease welfare participation and increase employment. Also, the reform has a positive effect on disposable income, making the individuals better off as a result of the reform. We also find that work requirements seem to work best for young people and for people born outside the Western world. |