Impact of the Mutual Obligation Initiative on the Exit Behaviour of Unemployment Benefit Recipients: The Threat of Additional Activities

Abstract

The Mutual Obligation Initiative requires young unemployment benefit recipients, who have received payments for 6 months, to undertake an activity, in addition to continuing to look for work, in return for those payments. The fact that eligibility for the Mutual Obligation Initiative is determined by age is exploited to evaluate the impact of this program on exit rates from benefit receipt as a natural experiment. Administrative data from the Department of Family and Community Services provides some evidence that individuals subject to the Mutual Obligation Initiative had higher exit rates immediately prior to imposition of the additional activity requirement.