Incentivizing last-resort social assistance clients : Evidence from a Finnish policy experiment

Abstract

In 2002, the Finnish government introduced an earnings disregard experiment aimed at improving the incentives of low-income individuals who receive last-resort social assistance. The aim of the experiment was to reduce unemployment by providing social assistance clients better incentives to receive at least temporary or part-time work. This paper evaluates the employment effects of the experiment as an event study using coarsened exact matching (CEM) and difference-in-differences. On average, the results show no employment effects, but there is some evidence on positive employment effects on women.