Dynamic effects of mandatory activation of welfare participants

Previous literature shows that activation requirements for welfare participants decrease welfare participation. However, the dynamics have not been examined, and often only exit eects are analyzed. In this paper, we look more closely at the transition rates into and out of welfare. Using register data on the entire population of Stockholm, we are able to capture how both entry and exit rates were aected when activation requirements were introduced at dierent times in Stockholm’s city districts. The results indicate that the main reduction in welfare participation is due to a small increase in exit rates. The part of the population that is at risk of entering into welfare, though, experiences a reduction in entry rates due to the reform. There are also heterogeneous eects, namely, large eects on entry rates for young individuals. In addition, there are larger eects on exit rates for unmarried individuals without children compared to the population as a whole.