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June 21, 2026Journal of Public Economics0 citationsOpen Access

Welfare Debt Relief Effects on Employment and Mental Health Outcomes

Welfare debt relief: Impact on employment, benefit receipt, and mental health

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Authors

EBErnst-Jan de BruijnHVHeike VethaakPKPierre Koning

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Overview

Randomized trial investigates the effects of welfare debt relief on employment and mental health in financially vulnerable individuals, suggesting reduced financial stress.

Key Points

  • This study examines how welfare debt relief impacts employment, benefit receipt, and mental health among those in financial distress.
  • Utilized eligibility cutoff from a Dutch welfare office to identify causal effects.
  • Employed instrumented difference-in-difference and fuzzy regression discontinuity design.
  • Analyzed linked administrative data to assess outcomes.
  • Debt relief reduces mental health medication use by about 1.1 percentage points (13.9%).
  • No significant effects observed on overall employment, earnings, or welfare receipt for the full sample.
  • Employment increases among debtors with severe debt positions, indicating debt overhang issues.

Cite This Study

Bruijn et al. (2026) studied this question.

synapsesocial.com/papers/6a377fb224f042ddf4c59f9ahttps://doi.org/10.1016/j.jpubeco.2026.105695
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