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In-work benefits for low-wage jobs

Abstract

"In-work benefits, which provide financial supplements to employees in low-wage jobs, are an instrument of active labour market policy used to encourage the labour market integration of low-skilled workers and the long-term unemployed. This paper argues that although government subsidies increase overall wages, employees interpret them as a signal that employers are unwilling to behave according to the norm of reciprocity. This leads to negative side-effects on employment stability, counteracting the positive effects of additional income on employment stability. The article tests these hypotheses using a survey of in-work benefit recipients, with non-recipients as a comparison group. The method of propensity score matching is applied to eliminate all compositional differences between benefit recipients and non-recipients except for the source of their income. It is shown that in-work benefits lead to perceived violations of reciprocity. However, whether this explains why in-work benefits are not successful in promoting employment stability remains an open question." (Author's abstract, IAB-Doku) ((en))

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Bibliografische Daten

Krug, Gerhard (2009): In-work benefits for low-wage jobs * can additional income reduce employment stability? In: European Sociological Review, Vol. 25, No. 4, S. 459-474.
 

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