Working Paper Series
IFAU - Institute for Evaluation of Labour Market and Education Policy
No 2011:17:
Earnings, income and poverty among welfare leavers in Sweden
Anna Persson ()
Abstract: Given the trend towards more active policies on reducing
the take-up of welfare benefits, the consequences of leaving welfare on
individual well-being constitutes a significant issue. This paper studies
the disposable income and poverty among welfare leavers in Sweden during 19
years (1990-2008). Using a rich set of register data we are able to
accurately measure disposable income and other financial and labor market
outcomes and thereby give a well-founded analysis of the financial
well-being of these individuals. We find that there are large and
significant differences in post welfare financial situation among those
that work full time after leaving welfare and those who work only a little
or not at all. Labor work is associated with a higher probability of
experiencing a financial gain after leaving welfare as well as a lower risk
of repeated dependency. This relationship is not sensitive to changes in
the business cycle, and is stronger for those that leave welfare after
having received relatively high amounts of benefits. Groups that typically
have a weaker attachment to the labor market are more sensitive to
variations in the business cycle. Leavers who neither work nor receive
benefits from social insurance are likely to be financially dependent on
family members, and they are also more likely than other leavers to be in
poverty. We conclude that leaving welfare is not always associated with
becoming financially better off, and post welfare well being depend heavily
on labor market outcomes.
Keywords: welfare leavers; poverty; self-sufficiency; disconnected leavers; (follow links to similar papers)
JEL-Codes: I31; J01; (follow links to similar papers)
62 pages, October 27, 2011
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