Does a Combination of Carrots and Sticks Reduce Benefit Dependency: A Field Experiment

This paper evaluates the Werk Loont ('Work Pays Off') program in the city of Rotterdam aimed at reducing the number of unemployed people claiming social assistance benefits. People are told about the program and the commitments it involves as soon as they apply for a benefit. Then a waiting period of four weeks starts before the benefit is granted. If a person is then still unemployed he is entitled to a benefit conditional on this willingness to participate in the program, which lasts for 15 weeks. During this period beneficiaries have to carry out unskilled work during one day each week. Three days are used for training and job search assistance. During the fifth day the beneficiary is supposed to apply for jobs. A field experiment using a randomised control group was carried out to evaluate the program. The results show that the program significantly reduces benefit dependency. The program reduces the chance that a persons becomes dependent on a benefit. And for those becoming dependent on a benefit the program increases the chance of leaving the benefit situation.