Paradox effects of financial incentives to work on employment stability : an analysis based on Boudon┐s cognitivist model

Abstract

"Financial incentives to work (in-work benefits) are an instrument of labour market policy to motivate the unemployed to re-enter employment. Following neoclassical economic reasoning, such financial incentives should be effective, since the unemployed are expected to maximize financial utility. However, one common empirical finding is that such wage-subsidized employment is rather unstable. Applying Boudons cognitivist model to the ending of wage-subsidized employment the hypotheses are derived that firstly the in-work benefit is interpreted by the employee as a signal for the firm┐s violation of the norm of reciprocity and secondly that the employee┐s resulting sanctioning behaviour can raise the probability for job terminations. Survey data on in-work benefit recipients is used to test the hypotheses, performing ordered logit and event history analysis in combination with propensity score matching. Results from the empirical analysis support the hypotheses. It is concluded that labour market policy should be based not only on the assumption of economically rational behaviour, if labour market programmes are to be effective." (Author's abstract, IAB-Doku) ((en))

Cite article

Krug, G. (2010): Paradoxe Folgen finanzieller Anreize zur Arbeitsaufnahme für die Beschäftigungsstabilität. Eine handlungstheoretische Analyse nach Boudon. In: Kölner Zeitschrift für Soziologie und Sozialpsychologie, Vol. 62, No. 2, p. 191-217. DOI:10.1007/s11577-010-0097-y