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Economic Effects of Workfare Reforms for Single Mothers: Benefit Substitution and Labour Supply Responses *
Author(s) -
Johnsen Julian Vedeler,
Reiso Katrine Holm
Publication year - 2020
Publication title -
the scandinavian journal of economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.725
H-Index - 64
eISSN - 1467-9442
pISSN - 0347-0520
DOI - 10.1111/sjoe.12352
Subject(s) - workfare , euros , economics , norwegian , single mothers , poverty , labour supply , payment , substitution effect , substitution (logic) , labour economics , poverty reduction , economic growth , market economy , psychology , developmental psychology , philosophy , linguistics , neoclassical economics , finance , humanities , computer science , welfare , programming language
We analyse the economic effects of nationwide Norwegian reforms on the state benefit programme targeting single mothers. Our results show that for each reduction of 100 Norwegian kroner (NOK) in benefit payments from the programme, single mothers replaced 65 NOK through benefit substitution. Their labour supply and disposable income also increased in the short term. However, the reforms doubled the poverty rate among single mothers in the long term. The reforms led to a total net gain to public expenditure of 3.6 billion NOK (449 million euros) during the 1998–2008 period, corresponding to a 14 percent decrease in total benefit payments to single mothers.