January 2009

IZA DP No. 3947: On Mandatory Activation of Welfare Recipients

Matz Dahlberg, Kajsa Johansson, Eva Mörk

This paper investigates whether mandatory activation programs for welfare recipients have effects on welfare participation, employment and disposable income. In contrast to earlier studies, we are able to capture both entry and exit effects. The empirical analysis makes use of a Swedish welfare reform in which the city districts in Stockholm gradually implemented mandatory activation programs for individuals on welfare. Overall, we find that mandatory activation of welfare recipients reduces overall welfare participation and increases employment. We also find that mandatory activation programs appear to work best for young people and for people born in non-Western countries.