How to Stimulate Single Mothers on Welfare to Find a Job : Evidence from a Natural Experiment

We present the results from a natural experiment in which single mothers on welfare were stimulated to find a job. Two policy instruments were introduced: an earnings disregard and job creation. The experiment was performed at the level of municipalities in The Netherlands, a country with relatively high benefits and low incentives for single mothers to leave welfare for work. In our analysis, we make a distinction between native and immigrant welfare recipients. For immigrant single mothers and some groups of native single mothers we find a positive employment effect of an earnings disregard. Job creation in addition to<br/>the earnings disregard increased working hours for some groups of single mothers. Although the outflow from welfare was not affected, welfare expenditures were reduced.