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Does the unemployment benefit institution affect the productivity of workers? Evidence from a field experiment

Author

Listed:
  • Mariana Blanco
  • Juan Fernando Vargas
  • Patricio S. Dalton
Abstract
We investigate whether and how the type of unemployment benefi t institution a ffects productivity. We designed a eld experiment to compare workers' productivity under a welfare system, where the unemployed receive an unconditional monetary transfer, with their productivity under a workfare system, where the transfer is received conditional on the unemployed spending some time on ancillary activities. First, we find that having an unemployment benefi t institution, regardless of whether it makes transfers conditional or unconditional, increases workers' productivity. Second, we fi nd that productivity is higher under Welfare than under Workfare. Becoming unemployed under Welfare comes at the psychological cost of a drop in self-esteem, presumably due to the shame or stigma associated with receiving an unconditional unemployment benefi t. We document the empirical relevance of precisely this channel. The di fferences we observe in productivity suggest that this psychological cost acts as an extra non monetary incentive for workers under Welfare to put a higher eff ort in their work.

Suggested Citation

  • Mariana Blanco & Juan Fernando Vargas & Patricio S. Dalton, 2013. "Does the unemployment benefit institution affect the productivity of workers? Evidence from a field experiment," Documentos de Trabajo 11015, Universidad del Rosario.
    • Handle: RePEc:col:000092:011015
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    File URL: http://repository.urosario.edu.co/bitstream/handle/10336/10958/11015.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    Unemployment Bene ts; Workfare; Productivity; Self-esteem; Shame.;
    All these keywords.

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings
    • J45 - Labor and Demographic Economics - - Particular Labor Markets - - - Public Sector Labor Markets

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