Incentivised employment schemes

Via Danyl on Twitter (from Dimpost) we have been offered the job of justifying specific incentive schemes for people currently out of employment.  The brief went as follows:

Whoever comes up with a policy-based excuse for the MSD Minister to shove beneficiaries’ heads down a toilet on live TV will be a rich man

In the interests of better public policy, helping those less fortunate, and becoming rich men – TVHE is taking it upon ourselves to discuss the benefits of this obviously positive scheme, the “pro-active employment incentive scheme“.

Now on the face of it, public humiliation seems like a terrible thing to do to someone.  However, it is important not to let moral considerations get in the way of an objective analysis of the facts – which will then allow us to weigh up the costs and benefits of the scheme more appopriately.

We have to realise that, when a scheme is put in place we can’t just look at some perceived “cost” that people who are currently beneficiaries would bear!  Undeniably, people would change behaviour given the possibility of having their heads shoved down a toilet, and our modeling suggests that the change in behaviour would make people better off then they are in the situation without this credible threat.

So, in the interests of clear and transparent accounting, here are bullets of the expected benefits of this scheme:

  1. A significant increase in beneficiaries moving into work:  This increases economic output, and increases the welfare of the individual by improving their human capital – which they are currently not taking into account when looking for work.
  2. An increase in labour productivity among the current workforce:  Knowing that unemployment comes with an additional cost, employees will spend less time on facebook and more time enjoying the process of creating output.
  3. A drop in labour force participation:  If you can’t find work, leave the labour market or get dunked in a toilet – in this situation some people will leave the labour market.  On the face of it this may seem like a bad thing, however we know that New Zealander’s work “too much” – if we have some people leaving the labour market altogether, this may well lower the average number of hours people are working!
  4. Consumption benefit to the viewing public:  Even if no-one ends up getting dunked, the idea of it will excite the public, satisfying a well know urge for public spectacles.

Of course there are costs, these are:

  1. The direct cost of being dunked and embarrased.  Our modeling suggests this is an insignificant issue.
  2. The cost of free-to-air TV:  Having to pay TV stations is a cost, however this issue is outside the scope of the study, and merely suggests setting a price somewhere.
  3. The cost of the minimum wage:  A minimum wage will ensure that some people who do not want to be dunked can’t find work!  As a result, this cost can be removed by removing the minimum wage.

As we can see, there are 4 bullet points in favour, and 3 against – two of which are pretty much irrelevant.  Compelling evidence in favour of a “pro-active employment incentive scheme” such toilet dunking and public wedgies.

Note:  None of this is serious.

  • Kimble

    5. Surely there must be benefits from promoting local content on TV too.

    • http://tvhe.co.nz/ Matt Nolan

      We live in an information age of patents and ideas – so that is an excellent point!

      If we had a truly free market in embarrasing beneficiaries we could just leave it up to the private sector, rather than having to involve MSD’s minister!

  • detmackey

    It’s not really a policy-relevant cost, but are there distributional concerns of higher toilet prices for usual toilet consumers? That is, the policy increases the demand for toilets and, so, the equilibrium price for households.

    • http://tvhe.co.nz/ Matt Nolan

      We could make the argument that our current toilet stock is being underutilized, and so it won’t have an impact on toilet prices. I find that compelling ;)

      • detmackey

        If that’s not the case, the toilet-using public are not a small voting group. I don’t know that this will be as politically popular as you think.

        • http://tvhe.co.nz/ Matt Nolan

          For the right amount of money I’ll talk to the appropriate stakeholders to get the information I need to make the case I was already aiming to make.

  • http://www.facebook.com/profile.php?id=1552449370 Paul Walker

    Just a quick question: Do you think there could be a problem with the demand side of the labour market as well as the supply side? Why not have the MSD minister shove the heads of employers who don’t offer jobs down a toilet on live TV?

    • http://tvhe.co.nz/ Matt Nolan

      There is definitely no problem on the demand side, as if I suggested there was the business owners wouldn’t pay me to suggest I repress labour.

      :D

    • detmackey

      Like this!