Events at CERGE-EI

Prof. Christian Dustmann

University College London, United Kingdom

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Authors: Lars Højsgaard Andersen, Christian Dustmann, and Rasmus Landersø

Abstract: We study the effects of Denmark’s Start Aid welfare reform for refugee immigrants, which educed benefits by around 50 percent for those granted residency after the reform. While leading to a sharp short run increase in labor earnings and employment, the reform also caused a persistent withdrawal of women from the labor force, and a large drop in average disposable income for the majority of households. A particular feature of the reform is that it effectively randomizes couples into two treatments where the same overall transfer reduction on the household level is differently distributed across partners. This difference in within-household distribution of transfers in turn leads to large differences in responses. Studying the reform’s unintended consequences on adults’ and children’s lives, we show that the large drop in average disposable income increases property crime among females and property and violent crime among males. Children’s likelihood of being enrolled in childcare or preschool, their performance in Danish language tests, and the number of years of education obtained decrease, while teenagers’ likelihood of claiming welfare and the likelihood that youths commit crime increase.
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