Unemployment Trap, Poverty Trap, and job-search allowance recipients : What Is the Fate of France’s Job-search Allowance?

Résumé 0

On the basis of the results of the INSEE survey about recipients of the RMI, we aim to evaluate the empirical relevance of analyses based on the notion of the unemployment trap, according to which recipients of the RMI suffer financial disincentives to work. The unemployment trap does not function very much for recipients of the RMI. First, recipients who are unemployed are very active in job searching and rarely refuse a job and even more rarely for financial reasons. They are more likely to face a shortage of labour demand. Secondly, about one out of three recipients who have accepted a job, do so with no financial advantage. For most of them, however, employment provides enhanced well-being. The risk for RMI recipients is more that of falling into a poverty trap than into an unemployment trap. Indeed, they most often have “poor quality jobs” and remain confined to a secondary sector, with a very low probability of migration towards a primary sector composed of “high quality jobs”. Codification JEL: J22, I38