The effect of welfare reforms on benefit substitution
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Date
2014-05Metadata
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- Discussion papers (SAM) [640]
Abstract
Policy-makers have confronted welfare dependence and poverty among single mothers by
imposing work requirements and time limits on the receipt of welfare benefits. Reforms with
such features have generally reduced programme case-loads and increased the employment
and earnings of single mothers. There is little evidence, however, on the amount of benefit
substitution associated with such reforms. In this paper, we test whether reductions in welfare
dependence may be offset by increased participation in other benefit programmes. Evaluating
the restrictive reforms of the welfare programme for single mothers in Norway, we find
evidence of considerable benefit substitution. Hence, decreases in programme case-loads do
not reflect equal reductions in welfare dependence.