Blanco, Mariana, Dalton, Patricio S. and Vargas, Juan F. (2013) Does the unemployment benefit institution affect the productivity of workers? Evidence from a field experiment. Working Paper. Coventry, UK: Department of Economics, University of Warwick. CAGE Online Working Paper Series, Volume 2013 (Number 178).

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Abstract

We investigate whether and how the type of unemployment benefit institution affects
productivity. We designed a field 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 benefit institution, regardless of whether it makes transfers
conditional or unconditional, increases workers' productivity. Second, we find 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
benefit. We document the empirical relevance of precisely this channel. The differences
we observe in productivity suggest that this psychological cost acts as an extra nonmonetary
incentive for workers under Welfare to put a higher effort in their work.

Item Type:	Working or Discussion Paper (Working Paper)
Subjects:	H Social Sciences > HB Economic Theory H Social Sciences > HM Sociology
Divisions:	Faculty of Social Sciences > Economics
Library of Congress Subject Headings (LCSH):	Unemployment insurance, Labor productivity -- Econometric models
Series Name:	CAGE Online Working Paper Series
Publisher:	Department of Economics, University of Warwick
Place of Publication:	Coventry, UK
Official Date:	November 2013
Dates:	Date Event November 2013 Published
Volume:	Volume 2013
Number:	Number 178
Number of Pages:	39
Institution:	University of Warwick
Status:	Not Peer Reviewed
Publication Status:	Published
Date of first compliant deposit:	23 June 2020
Date of first compliant Open Access:	23 June 2020
Funder:	Universidad del Rosario

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