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Are benefit reductions an effective activation strategy? The case of the lowest benefit recipients in Denmark

Published online by Cambridge University Press:  29 May 2020

M. AZHAR HUSSAIN ,
MORTEN EJRNÆS  and
JØRGEN ELM LARSEN Open the ORCID record for JØRGEN ELM LARSEN [Opens in a new window]
M. AZHAR HUSSAIN
Affiliation:
Department of Finance and Economics, University of Sharjah, and Department of Social Sciences and Business, Roskilde University
MORTEN EJRNÆS
Affiliation:
Department of Sociology and Social Work, Aalborg University
JØRGEN ELM LARSEN
Affiliation:
Department of Sociology, University of Copenhagen email: jel@soc.ku.dk
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Abstract

Decades of commitment to the basic principles of the Danish welfare state have been discarded with a new social policy reducing the benefits for people already at the bottom of the income ladder. The political intention is to increase job search via economic incentives that increase the gap between benefit income and market income. Using a panel dataset with benefit recipients, we show that the intended job search effect did not materialise to any significant extent; rather, the affected people became poorer because the vast majority of individuals could not respond to the economic incentives in the intended manner. Joblessness was not due to lack of incentives. This study confirms the importance of employability and self-efficacy, but it shows that health is an underlying variable that explains both of these factors and the recipients’ difficulties in getting a job. The results have two major social policy implications. Access to early retirement schemes should be easier for recipients who have serious health problems and therefore cannot respond to economic incentives, and there should be an increased focus on how to help the recipients without major health problems to develop self-efficacy.

Keywords

economic incentivessocial assistancehealthemploymentself-efficacyregression
Type
Article
Information
Journal of Social Policy , Volume 50 , Issue 3 , July 2021 , pp. 569 - 587
Copyright
© The Author(s), 2020. Published by Cambridge University Press

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