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Generous welfare makes people more likely to want to work

Written By: - Date published: 7:36 am, April 2nd, 2015 - 49 comments
Categories: benefits, class war, welfare - Tags: , , , ,

Interesting piece (ht Ruminator) at Science Daily recently:

Generous welfare benefits make people more likely to want to work, not less

Generous welfare benefit levels make people who are not in employment more likely to want to work rather than less, new research suggests.

Survey responses from 19,000 people in 18 European countries, including the UK, showed that “the notion that big welfare states are associated with widespread cultures of dependency, or other adverse consequences of poor short term incentives to work, receives little support.”

Sociologists Dr Kjetil van der Wel and Dr Knut Halvorsen examined responses to the statement ‘I would enjoy having a paid job even if I did not need the money’ put to the interviewees for the European Social Survey in 2010.

In a paper published in the journal Work, Employment and Society they compare this response with the amount the country spent on welfare benefits and employment schemes, while taking into account the population differences between states.

The researchers, of Oslo and Akershus University College, Norway, found that the more a country paid to the unemployed or sick, and invested in employment schemes, the more its likely people were likely to agree with the statement, whether employed or not.

They found that almost 80% of people in Norway, which pays the highest benefits of the 18 countries, agreed with the statement. By contrast in Estonia, one of least generous, only around 40% did. The UK was average for the generosity of benefits, and for the percentage agreeing with the statement — almost 60%.

“The notion that big welfare states are associated with widespread cultures of dependency, or other adverse consequences of poor short term incentives to work, receives little support. “On the contrary, employment commitment was much higher in all the studied groups in bigger welfare states. Hence, this study’s findings support the welfare resources perspective over the welfare scepticism perspective.”

The actual article can be found here (pdf). The authors have done what they could to make sure that the data used was balanced, to rule out socioeconomic factors, and to check reliability. In the end of course they are left with a correlation, not proof of cause, but it’s a very interesting correlation over a large data set.

This is the sort of data that should be further explored. As if common human decency wasn’t a good enough reason for adequate welfare support; as if the multiple economic, health and educational benefits to society weren’t enough; it may well be that proper welfare support also makes people more likely to want to work – and another nasty right-wing myth is contradicted by the evidence. Reality, as they say, has a well known liberal bias.


Speaking of data and right-wingers, this post by piece posted by David Farrar made be laugh: Why do myths and misinformation drown information, facts and science?. The answer, David, is that so many people work so hard to spread myths and disinformation. Big industry (tobacco, oil), conservative politicians, dirty politics bloggers – those kind of people David (recent minor example).

49 comments on “Generous welfare makes people more likely to want to work”

  1. One Anonymous Bloke 1

    It’s common sense that people want to give more to a society that values them. As for the poor righties, is there a single belief they hold that hasn’t been comprehensively debunked?

    • Draco T Bastard 1.1

      As for the poor righties, is there a single belief they hold that hasn’t been comprehensively debunked?

      Can’t think of one offhand.

      • aerobubble 1.1.1

        I heard that loss growth always means job losses. Like automation growth means job increases. Its nonsense of course, over simplified by the former ACC minister, discredited yet let back.

        Thatcherism caused a massive collapse in growth as a generationwere told their on their own, that in order to become rich they need to keep their cards close less some rich prick laywers up and steals off.

        We dont even house people who could be called up to fight in future conflicts, its just greed that says we cant afford it.

    • And at another level, workers want to give more to an employer who values them!

      It’s almost like when we think about ourselves as part of a community rather than individuals-in-competition we achieve better results. #creepingcommunism

      • tracey 1.2.1

        There were some surveys doing the round when I was a baby Lawyer. They suggested (this was early 90’s) that many employees, especially women, would rather have their work and efforts acknowledged, thanked than a pay rise. I recalls the two partners I worked for expressing surprise. “Why wouldn’t they want more money” they asked me…

        I said I am sure we all would but feeling valued gives people a boost that money doesn’t always, and it is economical. It didnt change their behaviour however…

        so didnt get more money or thanks.

        😉

        • Ah, but being the early 90s before the Employment Contracts Act really began to destroy collective bargaining, people’s pay might not have been such an issue as it is now. (I am guessing. I was a wee thing at the time.)

          • tracey 1.2.1.1.1

            Gender inequaltiy was a big issue. The survey (I should have been clearer) was from the Women Lawyers Association. I was hired about 6 months before another young (male) lawyer. He and I graduated from the same year at Auckland Uni. He had been on his OE since graduating. I had over 2 years experience. The firm had 2 partners so secretaries and secrets were shared. He was hired on a starting salary $10,000k higher than mine. When I left 2 years later I was earning more but so was he.

            Back then 50% of graduates from law school were women. Even today that figure is not reflected on the bench or in the partnerships.

    • johnm 1.3

      Hi OAB 1000% right! 🙂
      The opposite policy leaves demoralised defeated people unable to contribute.

  2. Olwyn 2

    Generous welfare provisions give people a choice. Not just whether to work or not, but whether to work for this boss or not. Which puts the boss class in the position where they have to meet certain standards if they want workers. However they want to set standards, not be forced to meet them. The myth is a euphemistic rendition of “Generous welfare benefits allow people to do otherwise. If they are asked to work under heinous conditions, there is every chance they will do otherwise.”

    • Draco T Bastard 2.1

      he myth is a euphemistic rendition of “Generous welfare benefits allow people to do otherwise. If they are asked to work under heinous conditions, there is every chance they will do otherwise.”

      Exactly what I’ve been thinking for the last few years. The bosses need atrocious welfare conditions so that people can be forced to work in atrocious conditions for minimal pay.

  3. fisiani 3

    Generous welfare makes people more likely to want welfare. Self evident. Fixed it for you.

    • weka 3.1

      I think that’s an argument for paying lower welfare rates to neoliberal right wingers such as yourself who believe that everyone is as self interested as they are. Maybe there should be a test.

    • miravox 3.2

      “Generous welfare makes people more likely to want welfare. Self evident. Fixed it for you”
      I guess you didn’t read the report. Let me make it easy for you. It concludes:

      This article concludes that there are few signs that groups with traditionally weaker bonds to the labour market* are less motivated to work if they live in generous and activating welfare states. The notion that big welfare states are associated with widespread cultures of dependency, or other adverse consequences of poor short term incentives to work, receives little support. On the contrary, employment commitment was much higher in all the studied groups in bigger welfare states and social differences were mostly smaller or did not vary across welfare states. Hence, this study’s findings support the welfare resources perspective over the welfare scepticism perspective.

      * e.g. (my words) poor, young, disabled, unemployed, ethnic minorities

      Read the rest here (as linked in the post) if you want to make a more informed comment

      Click to access 99.full.pdf

      Seems to me the greater stake society has in you, the greater the commitment to that society (fify). [edit: snap OAB]

      • tracey 3.2.1

        This is why you are all too hard on Fisiani. He/She is a lfty, and uses parody as humour to mock the government. By pretending to have not read the facts on which the post is based he/she shows up Farrar’s question for how stupid it is.

    • BassGuy 3.3

      I’m going to draw the obvious conclusion from your statement:

      Poor welfare makes part-time minimum wage more attractive. Fixed that for you.

      Mind you, you need 16 hours before you earn more than the dole. If you’re forced to work two jobs, then one pays secondary tax so many would need even more than that.

    • tracey 3.4

      David Farrar asks

      ” Why do myths and misinformation drown information, facts and science?. ”

      David, study Fisiani. Even when the facts are posted for him/her, he/she ignores it completely cos it doesn’t fit his/her personal belief system and agenda.. But you already know this David, people like Fisiani are your, Slater and Key’s fodder.

  4. One Anonymous Bloke 4

    🙄

    Faced with facts, Fisi’s automatic response is deny deny deny.

    People want to give back more to societies that value them: it’s self evident.

    • tracey 4.1

      And people like Fizzy never address why we make those born, or by accident, unable to ever work again, live on a subsistence level until they turn 65 (if they live that long) and then we give them a “pay rise” to 65% of the average wage. And, in this government’s case, take them right tot he supreme court to fight a minimum wage for their carers… and then bring in a law to get around Human Rights.

  5. vto 5

    quelle surprise

    the surprise is that righties do not see the truth of the human character

  6. Speaking of data and right-wingers, this post by David Farrar made be laugh…

    To be fair to David (I know, I know, but let me continue), the post wasn’t by him. It’s clearly labelled “A guest post by John Hughes of The Norwood Resource”.

    Of course, David chose to post it on his website, but I’m not sure the maxim “if you host something, you must agree with it” is one that applies? It would mean, for instance, that the various individuals with oversight of the website known as “The Standard” agree with and endorse every single guest post that they have ever hosted on their platform … .

    • r0b 6.1

      To be fair to David (I know, I know, but let me continue)

      By all means be fair to David!

      the post wasn’t by him

      Indeed not (lazy wording in post which I will fix). But in the case of a “one man band” blog like Kiwiblog if the blog owner posts it without disclaimer then I think the maxim applies (unlike anarchic collectives like this one where we frequently argue).

      After all, who doesn’t claim to support facts and science over myths and misinformation?

    • tracey 6.2

      Has he answered the question? David I mean, cos he surely knows the answer?

  7. Kaye 7

    I’m on the Supported Living Payment. Can’t hold down any form of paid work any more. BUT- before the reforms, ie cuts I wasn’t living under daily chronic stress over money and was fit enough give back to the community in the form of voluntary work. The stress has made my medical condition way worse, I’m no longer able to even volunteer, so I can’t give back to the community. Repeat this scenario for many people with long term disabilities who for years have been helping hold the non-profit sector together, as well as giving ourselves a reason to keep going.

    Benefit rates aren’t just an incentive to go back to paid work.

  8. Hateatea 8

    Given that the amount of income that you are allowed to earn before abatement of entitlement kicks in hasn’t changed in at least 10 years, there is actually a disincentive to seek paid employment under the current Job Seeker’s benefit.

    Abatement commences at $80 Gross. A person has to pay either secondary tax on that or get a special tax rate from IRD. By the time you factor in transport costs etc there is little, if any, increase in a person’s disposable income for the effort expended to get and maintain employment.

    We need to look at how we encourage people back to employment, not punish them for the efforts that they make.

  9. Penny Bright 9

    How about decent, full-time, well-paid jobs make people more likely to look for work?

    Penny Bright

    • tracey 9.1

      Well said…

      BUT how would the 1% get richer if that happens?

      • Murray Simmonds 9.1.1

        Good thinking Hateatea, Penny Bright and tracey.

        And fizziassi – er – My reply to you is self-censored.

    • fisiani 9.2

      Agreed. That’s National party policy and it’s working. More people employed than ever before in New Zealand. Record numbers of Kiwis returning from Australia to the better job opportunities here. Wages rising well ahead of inflation.

      • tracey 9.2.1

        Kaloo Kalay

      • Draco T Bastard 9.2.2

        That’s National party policy and it’s working.

        No it’s not. In fact, no government since 1984 has run with a full employment policy.

        More people employed than ever before in New Zealand.

        Now that is National Party policy and it is working – see your first sentence.

        Wages rising well ahead of inflation.

        Only for the few people at the top of the pile. The rest are either stagnant or going backwards.

  10. Phil 10

    The paper is really interesting, and I’d encourage people to read it themselves.

    Unfortunately, your title for this post overstates both the results of the paper and the other research in the field which it refers to. The paper gives a pretty good summary of the literature both ‘for’ and ‘against’ generous welfare systems, and even notes that we can’t really tell which direction any causality between work and welfare goes (i.e. is a strong work ethic a pre-condition for a generous welfare state?) .

    Anyway, getting to the nitty-gritty in particular:
    As you’ve written, the paper is only able to find correlation not causality. Labour markets are, even at the best of times and with the best quality data, really hard to understand. It’s great to see this kind of study being undertaken and contributing to the field of work.

    but… the correlations aren’t especially strong for welfare generosity.

    Unsurprisingly, Job Satisfaction comes out as the most significant factor – if you’re happy in your job you’re much more likely to keep working even if you don’t need to.
    The next two most significant factors are ethnicity and current employment status; if you’re part of an ethnic minority you’re less likely to be committed to remaining employed and (i think i have read this correctly) if you’re NOT in work, you’re more committed and want to be employed even if you don’t need to be.

    Welfare generosity slots in just behind those two factors in fourth place (of the observed factors only – there may be other factors or unobserved variables that explain more of the difference).

    There’s also a really interesting point toward the end of the paper; Welfare generosity is highly correlated with ALMP’s (alternative labour market policies), which is no surprise in-and-of-itself. ALMP’s, like training schemes, employment subsidies etc aim to lower the costs of finding employment. The paper acknowledges that those alternative policies may be just as large a driver of the results as welfare generosity.

  11. adam 12

    It all comes back to the Myth of Dolism.

    The core of this Myth is – intergeneration and ever increasing dependence on welfare. That left to grow, dolism will mean a shrinking tax base, so that eventually the rich will pay for everything. All this, whilst the poor sit at home all day and play, PlayStation.

    “add you favourite cliché about working people here…”

    Ironic, that many people who grew up with welfare, are the exact ones – who on obtaining wealth, want it removed.

    “add you favourite hypocrite here…”

    Dolism, a fantasy to scare middle-class white people. Because middle-class white people ‘ant scared enough.

    “add- something to scare the middle-class white people in your neighbourhood…”

    • Phil 12.1

      Here’s the paper from the OP on that matter, noting that plenty of literature exists which concludes “dolism” may very well be real.

      The predictions of the welfare scepticism approach are the opposite of those of the welfare resources perspective (e.g. Heinemann, 2008; Lindbeck and Nyberg, 2006). A basic assumption is that if individuals can obtain sufficient levels of well-being (economic, social and psychological) from living off public benefits, compared to being employed, they would prefer the former. When a ‘critical mass’ of individuals receive public benefits rather than engaging in paid work, the norms regulating work and benefit behaviour will weaken, setting off a self-reinforcing process towards the ‘selfdestruction’ of the welfare state (Heinemann, 2008). The more people are recipients of benefits, the less stigmatizing and costly in terms of social sanctions it is to apply for benefits (e.g. Heinemann, 2008: 240). Accordingly, as a consequence there will be spillover effects from benefit recipients to other people, between generations (Lindbeck and Nyberg, 2006), as well as at the company level and locally (Lindbeck et al., 2008; Rege et al., 2009), which in the end will undermine employment commitment and lead to the emergence of ‘dependency cultures’ (Murray, 1984).

      Similarly to Algan and Cahuc (2009), Michau (2009) argues that a high work ethic is
      a precondition for a generous welfare state. Once established, however, the generous welfare state will undermine its own normative base through parents’ adjustment of parenting style in anticipation of an enduring generous welfare state, making them less likely to teach their children to work hard. According to Michau (2009) and Lindbeck and Nyberg (2006), the drop in work ethic will only occur with a time lag of a generation after the introduction of generous benefits

      • tracey 12.1.1

        Phil

        Is the stuff in highlights a developed theory or an observation/conclusion from studies of actual welfare recipients?

        • Phil 12.1.1.1

          I haven’t read any of the studies I copy-pasted, but the modus operandi for a lot of this kind of research is to use ‘macro’ data (like GDP, unemployment rates, inflation, demography etc) first, where it exists.

          I.e. they’re studies of actual welfare data, at a macro level.

      • adam 12.1.2

        Source, please.

  12. Gosman 13

    Is this study supported by statistics that show that countries with higher benefits have lower ;levels of unemployment or at least lower levels of people leaving work for a benefits? That would be interesting if it was the case.

    • tracey 13.1

      You could find out and share it with us?

    • Phil 13.2

      I’d also love to see them dig into the data on company-creation and self-employment.

      My ‘prior’ would be that countries with more generous welfare systems provide a safety net to entrepreneurs; this reduces the net-risk of creating a company or embarking upon their own enterprise and then suffering the financial costs of failure.

  13. The Gormless Fool formerly known as Oleolebiscuitbarrell 14

    The researchers, of Oslo and Akershus University College, Norway, found that the more a country paid to the unemployed or sick, and invested in employment schemes, the more its likely people were likely to agree with the statement, whether employed or not.

    They agreed with the statement? Whoo!

    Did they go and get an actual job?

  14. Michael 15

    Thanks for posting this Anthony – and for the link to the research. I hope the Labour MPs who voted for National’s latest beneficiary-bashing legislation in the House today all get to read this.

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