Tuesday, 12 March 2013

Never give up? The persistence of welfare participation in Sweden

an article by Thomas Andrén (The Swedish Confederation of Professional Associations and IZA, Sweden ) and Daniela Andrén (Örebro University School of Business and CELSI, Sweden) published in IZA Journal of European Labor Studies Volume 2 Number 1 (2013)


Long-term social assistance dependency is a growing concern in Sweden and other European countries.

In order for policy makers to design effective welfare reforms it is important to know how strong the state dependence associated with social assistance is in the population and to what extent it varies with different factors, and among different groups.

We estimate the effect of the state dependence in social assistance for Sweden during the 1990s, for both Swedish-born and foreign-born.

Using a dynamic discrete choice model that controls for unobserved heterogeneity and the initial conditions problem, we found that the effect is three times larger for foreign-born compared to Swedish-born.

However, when the effect is distributed over time, it decreases and loses significance after three years for both groups.

This suggests that resources should be allocated for programmes that connect working-age recipients with the labour market as early as possible.

JEL classification: I30, I38, J18

Full text (PDF 24pp)

Hazel’s comment:
Deep sigh! Back in the 1970s employment advisers were very well aware that the best, i.e. most effective from everybody’s viewpoint, time to get an unemployed person into another job was within four to six weeks of unemployment commencing. Where did the government pour most of its money? Into helping the long-term unemployed.

Very suppressed rude words going through my head because the flippin’ government of whichever political complexion has been doing it ever since!!!

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