The Role of Incentives in Assisting Unemployed People into Employment: the impact of the Jobfinder's Grant

Abstract

Publicly funded support for assisting unemployed people back into work usually focuses on improving their vocational or job seeking skills, or providing financial incentives to employers to hire them. Very few schemes provide financial incentives directly to unemployed people to encourage them into employment. One such scheme is the Jobfinder’s Grant ( JFG) which, at present, provides a £200 flat rate payment to aid very long-term unemployed people (i.e. out of work for more than two years) in finding a job. The Grant is intended to encourage very long-term unemployed people `to take jobs that they would not otherwise have taken’. That is, to encourage people to begin or intensify their job search activity and, for others, to widen the range of jobs for which they might apply. During its pilot phase (April 1995-March 1997) the level of Grant and the way it was administered varied from region to region. This variation allows us to analyse the role direct financial incentives have on people’s job search behaviour and their decisions to take up job offers. The findings of the evaluation are particularly important in the current debate about increasing opportunities and incentives for people to return to work.