The short-term effect of a compulsory Work for the Dole trial

This paper summarises the results from an evaluation of the impact of an Australian active labour market program – Work for the Dole (WfD) – on employment and income support receipt outcomes of participants. The WfD program is part of the Australian system of ‘mutual obligation’ requirements that relate to income support recipients who are able to work, and are required to be actively seeking employment and taking steps to improve their chances of finding employment. From 1 July 2014 to 30 June 2015, the Australian Government implemented a new form of WfD in 18 geographic areas. WfD14–15 made it mandatory for employment service providers in the selected areas to refer eligible jobseekers aged 18–29 years to WfD. This paper estimates the short-term impact of WfD14–15 on (i) intermediate outcomes directly related to participation in WfD and the program’s mutual obligation objective, and (ii) participant outcomes related to indicators of the employability of jobseekers. WfD14–15 had substantial positive and statistically significant short-term impacts on the probability of being referred to a work experience activity, and part-time and casual employment reported. A much smaller positive impact on job placements and exiting income support was found. Our analysis strongly suggests that the effect of WfD14–15 on part-time and casual employment was due in part to a reporting effect and in part to a threat/behavioural effect of prompting those who can find employment but choose not to find employment to move into paid employment. An ongoing challenge faced by those running social security systems is underreporting of paid employment, particularly part-time employment. The findings reported in this paper do suggest that requiring income support participants to attend work-like activities can induce a reporting of previously undisclosed employment and that the level of additional reporting, if replicated nationally, would result in a significant reduction in social security expenditure