The Disincentive Effect of Social Assistance on French Young Workers

In metropolitan France, in the absence of a child, only those aged 25 and older are eligible to the minimum income (called RSA since June 2009, or RMI before that date). This article assesses whether the RMI or the RSA discourages young people to work. If this was indeed the case, we should observe a decline in the employment rate for those aged 25 and older, if some young people choose not to work, or reduce their job search effort from this age. Using the annual population census from 2004 to 2011, we observe no discontinuity in the employment rate around 25 years for all young people without children, which means that the minimum income schemes in France would have no sharp disincentive effect on youth employment around that age. A small discontinuity in the employment rate is nonetheless detectable for young people with no or low qualification (at the best the 'brevet des collèges') in the early years of the study (2004 and 2005), but it is no longer detectable thereafter, especially after the introduction of the RSA.