oa Hoe prikkelbaar zijn gemeenten?

How do municipalities react to the reform of financing social assistance benefits?

Since 2004, Dutch municipalities receive lump sum budgets to finance social assistance benefits. Although there is a broad consensus that this reform has provided municipalities with strong incentives to reduce the number of social assistance beneficiaries, these effects are probably less substantial than was initially expected. This article argues that there may be three possible reasons for this: (1) loss of incentives due to the organizational structure of municipalities; (2) the use of inaccurate performance indicators; and (3) crowding out of intrinsic motivation of case managers by explicit financial incentives. Particularly the first two reasons have turned out to be important impediments for the functioning of the financial incentives for municipalities. In light of these findings, the government may well consider other ways of influencing municipalities, such as enhancing the transparency of the relative performance of municipalities and co-financing research to stimulate the use of evidence based methods.