How to stimulate single mothers to leave welfare for work; evidence from a field experiment

In this paper, we present the results from a field experiment in the Netherlands 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 our analysis we make a distinction between native and immigrant welfare recipients. For immigrant single mothers we find a positive employment effect of an earnings disregard. For native single mothers with the youngest child between 5 and 11 years the earnings disregard had a weakly significant positive effect on working hours. Job creation increased working hours for immigrant single mothers with the youngest child between the age of 5 and 11 and for native single mothers with the youngest child in the age category from 0 to 4 years. Although the outflow from welfare is not affected, welfare expenditures go down.