Manasi Deshpande, Michael Mueller-Smith, 05 July 2022

Cuts to welfare programmes have historically been motivated by concerns that they can discourage educational achievement and work. This column uses the natural experiment of the 1996 welfare reform law in the US to examine the effect of welfare programmes on a different type of ‘work’: criminal activity intended to generate income. The authors find that removing young adults from the US Supplemental Security Income programme increases criminal justice involvement, and especially illicit income-generating activity. While the programme does indeed discourage formal employment among young adults, its much larger effect is to discourage criminal activity.

Gordon Dahl, Anne Gielen, 29 May 2018

Although an extensive literature has documented intergenerational correlations in welfare receipt, there is little evidence on whether this relationship is causal. Do benefit schemes create a culture of dependency within families? This column finds that children of parents in the Netherlands who were pushed out of disability insurance following a reform were less likely to participate in the programme as adults. The fiscal spillovers from these intergenerational links have a sizable effect on the government’s long-term budget.

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