The Work Programme, Benefit Sanctions and Protest Voting (joint with Thiemo Fetzer)

Abstract: The Work Programme (WP) was an EU sponsored active labour market welfare-to-work programme in the UK introduced in June 2011 by the coalition government and affecting around 2 million individuals. Rewarded work programme providers helped welfare claimants finding a job through payment-by-result contracts. The program was radical in both scale and approach, caused a substantial public outcry, and lead to a substantial amount of media coverage questioning its effectiveness. This paper studies the WP and specifically focuses on intended and unintended effects. We exploit exogenous variation due to the random assignment of individual referrals to individual contractors. This generates, at a finer geographic level, excess referrals whereby a contractor has to handle out of chance more cases referred than they expected. This strengthens incentives to “skim the cream”.

We document that excess referrals are strongly and causally associated with a subsequent increase in benefit sanction referrals, which in turn produce financial grievances. We further investigate whether these WP-induced benefit sanctions had an impact on political outcomes and broader social and economic outcomes such as local election support for UKIP, support for Leave, etc. The latter is not unlikely as the Work Programme made the European Union immediately salient for all WP participants as all letters and communication were mandated to be branded with the European Union flag, as it co-financed by the European Union cohesion fund.