Abstract
AbtractThe comment assesses two opposed approaches to design a social labor market for better social inclusion of the unemployed currently under debate in Germany. One approach is the so-called solidary basic income which would offer a choice to take up public employment to all unemployed on social welfare. We argue that the proposal raises serious concerns on both equity and efficiency grounds. In particular, it may lead capable unemployed into dead ends and generate economic losses, as it shifts reservation wages concerning private sector jobs upwards by a wide margin. The other approach is permanent subsidized employment for unemployed welfare recipients with no chance to regain regular jobs. We argue that this might be an efficient approach to foster social inclusion, provided that access to the targeted social labor market is strictly controlled, that subsidized employed is primarily organized within the private sector, and that subsidized employment is accompanied by social casework.
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