IESET.
Hypotheses·fiscal·transfer_expansion_work_incentive_long_run

Large expansions of means-tested or categorical transfers without work- incentives or activation requirements predict lower prime-age labour-force participation rates over 15-20-year windows relative to expansions that incorporate negative-income-tax or earned-income-tax-credit designs, in an OECD and rich-country panel 1980-2020.

The directional claim is that a 5-percentage-point increase in transfer spending as a share of GDP, when accompanied by weak work incentives, predicts a 1-3 percentage point decline in prime-age (25-54) labour-force participation over the subsequent two decades, while an equivalent expansion with strong work incentives predicts no significant decline or a smaller decline.

INCONCLUSIVEengine/runs/transfer_expansion_work_incentive_long_run

INCONCLUSIVE_DATA_PENDING — no outcome variable loaded; missing: ['oecd_lfs:lfpr_25_54', 'ilo:emp_15_64']

confidence cueResult card produced; verdict unclassified.

policy briefCoverage too thin

In ordinary language

Over a long period, do more market-oriented institutions translate into higher income or productivity, once the comparison looks beyond a single success story?

plain answer

This test cannot make a firm call yet. no outcome variable loaded; missing: ['oecd_lfs:lfpr_25_54', 'ilo:emp_15_64']

why it matters

This matters because fiscal claims should change belief only when they survive a pre-declared empirical test.

how the test works

It compares 35 country or place units from 1980 to 2020, using a panel fe design, with fixed effects for country and year.

what was measured
What changed
  • Transfer expansion without work incentives
  • Transfer expansion with work incentives
Possible pathway
  • Long term unemployment rate
  • Inactivity rate
What we checked
  • Prime age labour force participation rate
  • Employment to population ratio 15 64
what this does not prove

A single test is not the whole truth. It narrows the claim under a specific sample, time period, and method. Strong policy conclusions need the pattern to survive nearby tests, alternative data, and serious objections.

verification

No evidence packet has been generated yet.

Results

engine/runs/transfer_expansion_work_incentive_long_run
1007550250198020002020AUSAUTBELCANCHECHLCZE
illustrative sketch · run pending
No coefficients yet. When the model fires, this chart will show prime_age_labour_force_participation_rate across 35 sampled countries over 1980–2020.
The shapes above are stylised — none of the lines are real data.
Placeholder for transfer_expansion_work_incentive_long_run. Published chart will be generated from engine/runs/transfer_expansion_work_incentive_long_run/chart_data.json.

Pre-registration

pre-registered
first-spec commit 5ce4495 · 2026-05-02T19:11:20Z
run generated · 2026-06-29T17:52:37Z

Large expansions of means-tested or categorical transfers without work- incentives or activation requirements predict lower prime-age labour-force participation rates over 15-20-year windows relative to expansions that incorporate negative-income-tax or earned-income-tax-credit designs, in an OECD and rich-country panel 1980-2020. The directional claim is that a 5-percentage-point increase in transfer spending as a share of GDP, when accompanied by weak work incentives, predicts a 1-3 percentage point decline in prime-age (25-54) labour-force participation over the subsequent two decades, while an equivalent expansion with strong work incentives predicts no significant decline or a smaller decline.

Falsification criterion — what would disprove this

set before the run · honoured after

This hypothesis is considered falsified if:

SUPPORTED if β1 (transfers without incentives) is negative and significant at p<0.10 while β2 (transfers with incentives) is insignificant or less negative. PARTIAL if both are negative but |β1| > |β2|. REFUTED if β2 is negative and significantly larger than β1 (work incentives backfire) or if both are positive. INFORMATIVE: the male prime-age subsample should show the same pattern as the full sample; if only females drive the result, the mechanism is family-structure rather than work-incentive design.

formal test & threshold
test:      panel_fe_transfer_design_labour_force_participation_20yr
threshold: β_transfers_no_incentives < 0 at p<=0.10  AND β_transfers_with_incentives >= 0 or p>=0.10  AND |β_transfers_no_incentives| > |β_transfers_with_incentives|  AND Male subsample retains pattern.

Method

Template
panel_fe
Fixed effects
country, year
Clustering
country
Sample
35 countries · 1980 – 2020
Evidence type
associational

Two-way FE panel with 10-year differences to capture medium-run behavioural responses: ΔLFPR = β0 + β1*Δtransfers_no_incentives + β2*Δtransfers_with_incentives + controls + FE. Robustness: (1) use 5-year non-overlapping averages; (2) subsample by gender (male vs female prime-age participation); (3) IV for transfer expansions using political-turnover instruments (left-government tenure as predictor of transfer expansion).

Data

VariableSourceTransform
prime_age_labour_force_participation_rate
outcome
oecd:lfpr_25_54tier 2
level
employment_to_population_ratio_15_64
outcome
ilo:emp_15_64tier 2
level
transfer_expansion_without_work_incentives
treatment
constructed:social transfers excluding EITC/NIT equivalents / GDP, interacted with benefit-replacement-rate proxytier 5
level
transfer_expansion_with_work_incentives
treatment
constructed:EITC/NIT-equivalent spending + ALMP spending / GDPtier 5
level
long_term_unemployment_rate
channel
oecd:long_term_unemployment_ratetier 2
level
inactivity_rate
channel
oecd:inactivity_rate_25_54tier 2
level
initial_labour_force_participation
control
oecd:lfpr_25_54tier 2
5yr_lagged_level
female_education_rate
control
world_bank_wdi:SE.TER.CUAT.BA.FE.ZStier 2
level
elderly_dependency_ratio
control
world_bank_wdi:SP.POP.DPND.OLtier 2
level
minimum_wage_relative_to_median
control
oecd:minimum_wage_relative_mediantier 2
level
union_density
control
oecd:union_densitytier 2
level

● ready  · ● pending  · ● reconstruct-needed

Detailed result card

Result card — transfer_expansion_work_incentive_long_run

Verdict: INCONCLUSIVE_DATA_PENDING — no outcome variable loaded; missing: ['oecd_lfs:lfpr_25_54', 'ilo:emp_15_64']

Pre-registration

  • Claim: Large expansions of means-tested or categorical transfers without work- incentives or activation requirements predict lower prime-age labour-force participation rates over 15-20-year windows relative to expansions that incorporate negative-income-tax or earned-income-tax-credit designs, in an OECD and rich-country panel 1980-2020. The directional claim is that a 5-percentage-point increase in transfer spending as a share of GDP, when accompanied by weak work incentives, predicts a 1-3 percentage point decline in prime-age (25-54) labour-force participation over the subsequent two decades, while an equivalent expansion with strong work incentives predicts no significant decline or a smaller decline.
  • Falsification rule: SUPPORTED if β1 (transfers without incentives) is negative and significant at p<0.10 while β2 (transfers with incentives) is insignificant or less negative. PARTIAL if both are negative but |β1| > |β2|. REFUTED if β2 is negative and significantly larger than β1 (work incentives backfire) or if both are positive. INFORMATIVE: the male prime-age subsample should show the same pattern as the full sample; if only females drive the result, the mechanism is family-structure rather than work-incentive design.
  • Falsification test: panel_fe_transfer_design_labour_force_participation_20yr

Estimate

  • Error: no outcome variable loaded; missing: ['oecd_lfs:lfpr_25_54', 'ilo:emp_15_64']

Variables resolved

  • world_bank_wdi:SE.TER.CUAT.BA.FE.ZS → female_education_rate (controls, publisher=world_bank_wdi, n=1401)
  • world_bank_wdi:SP.POP.DPND.OL → elderly_dependency_ratio (controls, publisher=world_bank_wdi, n=16935)

Variables missing data

  • oecd_lfs:lfpr_25_54 (outcome, name=prime_age_labour_force_participation_rate) — vintage not on disk
  • ilo:emp_15_64 (outcome, name=employment_to_population_ratio_15_64) — vintage not on disk
  • constructed: social transfers excluding EITC/NIT equivalents / GDP, interacted with benefit-replacement-rate proxy (treatment, name=transfer_expansion_without_work_incentives) — vintage not on disk
  • constructed: EITC/NIT-equivalent spending + ALMP spending / GDP (treatment, name=transfer_expansion_with_work_incentives) — vintage not on disk
  • oecd_lfs:long_term_unemployment_rate (decomposition_channels, name=long_term_unemployment_rate) — vintage not on disk
  • oecd_lfs:inactivity_rate_25_54 (decomposition_channels, name=inactivity_rate) — vintage not on disk
  • oecd_lfs:lfpr_25_54 (controls, name=initial_labour_force_participation) — vintage not on disk
  • oecd_epl:minimum_wage_relative_median (controls, name=minimum_wage_relative_to_median) — vintage not on disk
  • oecd_employment:union_density (controls, name=union_density) — vintage not on disk

Generated by scripts/run_panel_fe.py at 2026-06-29T17:52:37+00:00

Strongest opposing argument

Every hypothesis ships with its charitable opposing argument. The framework earns credibility by handling objections at their strongest, not weakest.

Notes

Data readiness: - OECD LFS prime-age LFPR, long-term unemployment, inactivity (ready) - OECD SOCX social transfers, in-work benefits, ALMP (ready) - ILOSTAT employment-to-population (ready) - WDI female education, elderly dependency (ready) - OECD EPL minimum wage, union density (ready)

Authored framework. Read the transparency note.