P18

Projectmembers:
Prof. Dr. Klaus F. Zimmermann, UNU-MERIT & Maastricht University
Dr. Hilmar Schneider, IZA Bonn
Prof. Dr. Armin Falk, briq and Universität Bonn
Dipl. Volksw. Arne Uhlendorff, DIW Berlin

The German social security system and its inherent means tested social welfare generate implicit minimum wages and thereby create negative incentives for the labour supply in the low wage. This incentive problem can be solved economically by only granting the full amount of workfare to those who in return accept a public employment (workfare). In comparison to the current regulation, this increases the incentive to work in low paid jobs with an income slightly above the social welfare amount. Therefore, workfare is an important instrument to increase employment in the low pay sector and to increase flexibility on the German labor market. Nevertheless, this economically appealing concept is lacking public support, which could be a restriction for its implementation. The aim of the project is twofold: First to empirically evaluate incentive effects of workfare programs by using data from a field experiment with young social welfare recipients in Berlin as well as laboratory experiments. Secondly, experiments are conducted to investigate the acceptance of workfare programs.