Andrew Leigh

I blogged in early-April about Tony Abbott's 'work for the headline' policy, pointing out that the only study done on the efficacy of Work for the Dole - commissioned by the Howard Government - found that it reduced the prospects of jobseekers moving off welfare.

Now Jeff Borland, the author of that study, has written a piece for The Conversation about his findings, and the implications they have for Mr Abbott's proposals. Key quotes:

Tony Abbott’s recently unveiled welfare reform package advocating a range of tough policies to push people into work has been described by Prime Minister Julia Gillard as ‘reheated'.

You might expect that part of reheating would involve throwing out those parts of the menu that hadn’t worked.

In this case that doesn’t seem to have happened. The proposed Coalition approach for improving outcomes for the unemployed reinstates the Work for the Dole program to centre stage.

Yet the only independent research study undertaken of this program found that – far from improving outcomes for the unemployed – Work for the Dole caused participants to spend longer amounts of time on welfare payments. ...

Work for the Dole participants were still substantially more likely to remain unemployed. A consequence of Work for the Dole participants moving off payments more slowly was that they spent a longer average amount of time in receipt of payments. By 12 months after commencing participation they had been in receipt of payments on average for 2.2 fortnights longer than those who did not participate in Work for the Dole.

Why might Work for the Dole participants spend a longer time unemployed? We believe that the main potential explanation is that participation in Work for the Dole may cause or allow reduced job search effort.

There is growing international evidence of a ‘lock-in’ or ‘attachment’ effect during program participation. For example, an evaluation of the Community Work Program in New Zealand found that many participants viewed their work experience placements as ‘work’ and therefore did not engage in job search activity.

A lock-in effect would explain why the rate of exit from welfare payments was so much slower for Work for Dole participants during the time when they were doing Work for the Dole, but reversed thereafter so that their rate of exit was quicker than for non-participants.

Unemployed who have done Work for the Dole however never completely caught up to others in the likelihood of moving off welfare payments. One possibility to explain this absence of catch-up is that there is a permanent ‘scarring’ effect on Work for the Dole participants. ...

Having policies to improve labour market outcomes for the unemployed should be a major policy objective for any government. ...

On the evidence available, however, Work for the Dole cannot be part of achieving the objective. Suggesting that it might seems to be more about creating the impression that all the unemployed need to get back to work is a good kick in the bum.