People who are out of work often need more than just financial support; they also need motivation to actively seek employment. Research conducted by Leiden University delves into the impact of incentives employed by benefit agencies, like encouraging individuals to broaden their job search. The study also examines the consequences when the application process takes an unintentionally long time, revealing results that often contradict each other.
Common beliefs, both among the public and policymakers, suggest that unemployment benefits should not be overly comfortable, as this might reduce the motivation for job seekers to actively look for paid work.
Employment incentives
The study investigates which incentives provided by the UWV (responsible for unemployment benefits) and the municipality (in charge of social assistance benefits) increase the likelihood of people finding employment. This is crucial for both individuals and society, as a sustainable social security system is vital, and people generally tend to be happier and healthier when employed.
In a significant experiment conducted by the UWV from 2015 to 2017, around 130,000 individuals receiving unemployment benefits for at least six months had additional meetings with their client manager to discuss their job search strategy.
The client manager had the authority to stress the importance of expanding their job search, encouraging them to explore opportunities beyond their qualifications, prior work experience, salary expectations, or commuting preferences. If participants failed to meet these requirements in follow-up meetings, their benefits could be reduced.
Mixed results
Interestingly, participants in the experiment did indeed find employment sooner. However, the study revealed that this positive outcome was not primarily due to the specific requirements they were asked to fulfill.
“The research shows that it is the additional meeting with the client manager that has a positive effect,” the researchers explain. “We discovered that meetings in which the client manager did compel them to widen the search were actually counterproductive.”
So, why did participants in the experiment find work sooner, even though it wasn’t necessarily because of the specific requirements they had to meet? Well, it turns out that this particular group often benefits from a more focused job search. The requirements pushed them to change their approach and concentrate on jobs that were less likely to be in their usual scope. Even if they did manage to secure a job, it was often for fewer hours and temporarily.
Getting help
The researcher also looked into the impact of the time it takes to apply for social assistance benefits in Rotterdam. Applications were randomly assigned to income consultants from the Municipality of Rotterdam, who assist people in claiming benefits. Similar to other places, there were variations in the time it took to process these claims.
Interestingly, this wasn’t a deliberate policy in Rotterdam but rather stemmed from administrative reasons. The researchers note that even a slight delay of a few weeks in receiving benefits can have a significant impact on individuals.
“It can mean that some applicants do not complete their claims and do not receive social assistance benefits,” the researchers explain. “But these do generally appear to be those who stood the most chances of finding a job. They often found work in the meantime and were therefore less dependent on benefits.”
Adverse consequences
The research revealed that a lengthier application process had adverse consequences for applicants receiving social assistance benefits. They tended to stay on benefits for a more extended period and were less likely to secure employment.
This raises questions about whether deliberately aiming for a prolonged application process is a wise policy tool, or if it has any real benefits at all. This is particularly crucial considering that individuals who do not receive an advance on their benefits payments during a protracted application process tend to face greater challenges.
“Our results suggest that advances reduce the financial stress caused by a period without an income,” the authors conclude. “And less stress in turn is more likely to result in a more successful job search.”
