This discussion paper resulted in a publication in the 'Journal of Applied Econometrics', 2013, 28, 275-296.<P> To increase their transition from welfare to work, benefit recipients in the municipality of Rotterdam were exposed to various financial incentives, including both carrots to sticks. Once...</p>

Randomized experiments provide policy relevant treatment effects if there areno spillovers between participants and nonparticipants. We show that thisassumption is violated for a Danish activation program for unemployed workers.Using a difference-in-difference model we show that the...