The Effects of Municipal Policy Strategies on Social Assistance Inflow and Outflow in the Netherlands, 1999–2007

Abstract

Do the local labour market policies of municipalities matter? The scientific debate on such policies mainly concentrates on (1) the effectiveness of active labour market policies and programmes in terms of improving the labour market chances of jobless workers, and (2) the organization of labour market policy in terms of governance, management, and coordination or cooperation with neighbouring municipalities, educational institutes, etc. In this paper we explore both dimensions. We start by describing recent reforms in the Netherlands in which the financial responsibility for social assistance was decentralized to 443 municipalities. The effects of the labour market strategies of municipalities on social assistance inflow and outflow are then identified, measured, and compared in an empirical analysis. We find positive effects of control, activation, employment creation, and coordination strategies on social assistance inflow and outflow. This suggests that the activities of municipalities do matter, although the effects are small and differ across labour market strategies.