[go: up one dir, main page]
More Web Proxy on the site http://driver.im/
IDEAS home Printed from https://ideas.repec.org/a/eee/econom/v153y2009i1p1-20.html
   My bibliography  Save this article

The dynamic effects of an earnings subsidy for long-term welfare recipients: Evidence from the self sufficiency project applicant experiment

Author

Listed:
  • Card, David
  • Hyslop, Dean R.
Abstract
In the Self Sufficiency Project Applicant Experiment, new welfare entrants were informed that if they remained on public assistance for a year they would become eligible to receive a generous earnings subsidy offer. Those who satisfied the waiting period, and then left welfare and began working full time within the following year, were entitled to receive payments for up to 36 months whenever they were off welfare and working full time. A simple optimizing model suggests that the program rules created an unusual sequence of incentives: (1) to prolong the initial spell on welfare for at least 12 months to become eligible for the subsidy offer; (2) to lock in subsidy entitlement by finding full time work and leaving welfare in the 12-24 month period after initial entry; and (3) to choose work over welfare during the three years that subsidies were available. Consistent with these implications, comparisons between the experimental treatment group and a randomly assigned control group show that the program increased welfare participation in the first year after initial entry and lowered it over the following 5 years. We develop an econometric model of welfare participation and program eligibility status that allows us to separately identify the behavioral effects associated with the program rules. We find important responses to all three incentives, and that the program impact persisted after subsidy payments ended, although the effect decayed over time.

Suggested Citation

  • Card, David & Hyslop, Dean R., 2009. "The dynamic effects of an earnings subsidy for long-term welfare recipients: Evidence from the self sufficiency project applicant experiment," Journal of Econometrics, Elsevier, vol. 153(1), pages 1-20, November.
    • Handle: RePEc:eee:econom:v:153:y:2009:i:1:p:1-20
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0304-4076(09)00074-8
    Download Restriction: Full text for ScienceDirect subscribers only
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. David Card & Dean R. Hyslop, 2005. "Estimating the Effects of a Time-Limited Earnings Subsidy for Welfare-Leavers," Econometrica, Econometric Society, vol. 73(6), pages 1723-1770, November.
    2. Ham, John C & LaLonde, Robert J, 1996. "The Effect of Sample Selection and Initial Conditions in Duration Models: Evidence from Experimental Data on Training," Econometrica, Econometric Society, vol. 64(1), pages 175-205, January.
    3. Jeremy Lise & Shannon Seitz & Jeffrey Smith, 2015. "Evaluating search and matching models using experimental data," IZA Journal of Labor Economics, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 4(1), pages 1-35, December.
    4. Card, David & Robins, Philip K., 2005. "How important are "entry effects" in financial incentive programs for welfare recipients? Experimental evidence from the Self-Sufficiency Project," Journal of Econometrics, Elsevier, vol. 125(1-2), pages 113-139.
    5. Card, David & Sullivan, Daniel G, 1988. "Measuring the Effect of Subsidized Training Programs on Movements in and out of Employment," Econometrica, Econometric Society, vol. 56(3), pages 497-530, May.
    6. Robert A. Moffitt, 1996. "The effect of employment and training programs on entry and exit from the welfare caseload," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 15(1), pages 32-50.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Riddell, Chris & Riddell, W. Craig, 2016. "When Can Experimental Evidence Mislead? A Re-Assessment of Canada's Self Sufficiency Project," IZA Discussion Papers 9939, Institute of Labor Economics (IZA).
    2. Adnan Q. Khan & Steven F. Lehrer, 2013. "The Impact of Social Networks on Labour Market Outcomes: New Evidence from Cape Breton," Canadian Public Policy, University of Toronto Press, vol. 39(s1), pages 1-24, May.
    3. Brouillette, Dany & Lacroix, Guy, 2010. "Heterogeneous treatment and self-selection in a wage subsidy experiment," Journal of Public Economics, Elsevier, vol. 94(7-8), pages 479-492, August.
    4. Dorsett, Richard & Oswald, Andrew J, 2014. "Human Well-Being And In-Work Benefits: A Randomized Controlled Trial," The Warwick Economics Research Paper Series (TWERPS) 1038, University of Warwick, Department of Economics.
    5. Tue Gørgens & Dean Robert Hyslop, 2018. "The Specification of Dynamic Discrete-Time Two-State Panel Data Models," Econometrics, MDPI, vol. 7(1), pages 1-16, December.
    6. James Heckman & Tim Kautz, 2013. "Fostering and Measuring Skills: Interventions That Improve Character and Cognition," Working Papers 2013-019, Human Capital and Economic Opportunity Working Group.
    7. Bruno Van der Linden, 2021. "Do in-work benefits work for low-skilled workers?," IZA World of Labor, Institute of Labor Economics (IZA), pages 246-246, June.
    8. Dorsett, Richard & Oswald, Andrew J., 2014. "Human Well-being and In-Work Benefits: A Randomized Controlled Trial," IZA Discussion Papers 7943, Institute of Labor Economics (IZA).
    9. Nicholas-James Clavet & Jean-Yves Duclos & Guy Lacroix, 2013. "Fighting Poverty: Assessing the Effect of Guaranteed Minimum Income Proposals in Quebec," Canadian Public Policy, University of Toronto Press, vol. 39(4), pages 491-516, December.
    10. Lynn Riggs & Dean Hyslop & David Maré, 2022. "Estimating the impact of the Families Package changes in financial incentives," Working Papers 22_06, Motu Economic and Public Policy Research.
    11. Jeffrey Smith & Arthur Sweetman, 2016. "Viewpoint: Estimating the causal effects of policies and programs," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 49(3), pages 871-905, August.
    12. Rainer Eppel & Helmut Mahringer, 2012. "Do wage subsidies work in boosting economic inclusion? Evidence on e," EcoMod2012 4065, EcoMod.
    13. Kautz, Tim & Heckman, James J. & Diris, Ron & ter Weel, Bas & Borghans, Lex, 2014. "Fostering and Measuring Skills: Improving Cognitive and Non-Cognitive Skills to Promote Lifetime Success," IZA Discussion Papers 8696, Institute of Labor Economics (IZA).
    14. Stephan, Gesine & van den Berg, Gerard & Homrighausen, Pia, 2016. "Randomizing information on a targeted wage support program for older workers: A field experiment," VfS Annual Conference 2016 (Augsburg): Demographic Change 145487, Verein für Socialpolitik / German Economic Association.
    15. Meliyanni Johar & Shiko Maruyama & Jeffrey Truong, 2017. "The contribution of Western fast food to fast-growing body mass in China," Applied Economics, Taylor & Francis Journals, vol. 49(8), pages 797-811, February.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. David Card & Dean R. Hyslop, 2006. "The Dynamic Effects of an Earnings Subsidy for Long-Term Welfare Recipients: Evidence from the SSP Applicant Experiment," NBER Working Papers 12774, National Bureau of Economic Research, Inc.
    2. Guido W. Imbens & Jeffrey M. Wooldridge, 2009. "Recent Developments in the Econometrics of Program Evaluation," Journal of Economic Literature, American Economic Association, vol. 47(1), pages 5-86, March.
    3. Brouillette, Dany & Lacroix, Guy, 2010. "Heterogeneous treatment and self-selection in a wage subsidy experiment," Journal of Public Economics, Elsevier, vol. 94(7-8), pages 479-492, August.
    4. David Card & Pablo Ibarrarán & Ferdinando Regalia & David Rosas-Shady & Yuri Soares, 2011. "The Labor Market Impacts of Youth Training in the Dominican Republic," Journal of Labor Economics, University of Chicago Press, vol. 29(2), pages 267-300.
    5. Riddell, Chris & Riddell, W. Craig, 2016. "When Can Experimental Evidence Mislead? A Re-Assessment of Canada's Self Sufficiency Project," IZA Discussion Papers 9939, Institute of Labor Economics (IZA).
    6. Tue Gørgens & Dean Robert Hyslop, 2018. "The Specification of Dynamic Discrete-Time Two-State Panel Data Models," Econometrics, MDPI, vol. 7(1), pages 1-16, December.
    7. Bruno Crépon & Gerard J. van den Berg, 2016. "Active Labor Market Policies," Annual Review of Economics, Annual Reviews, vol. 8(1), pages 521-546, October.
    8. Islam, Nizamul, 2007. "A Dynamic Tobit Model of Female Labor Supply," Working Papers in Economics 259, University of Gothenburg, Department of Economics.
    9. Pieter Gautier & Paul Muller & Bas van der Klaauw & Michael Rosholm & Michael Svarer, 2018. "Estimating Equilibrium Effects of Job Search Assistance," Journal of Labor Economics, University of Chicago Press, vol. 36(4), pages 1073-1125.
    10. David Card & Pablo Ibarraran & Ferdinando Regalia & David Rosas & Yuri Soares, 2007. "The Labor Market Impacts of Youth Training in the Dominican Republic: Evidence from a Randomized Evaluation," NBER Working Papers 12883, National Bureau of Economic Research, Inc.
    11. Berg, Nathan & Gabel, Todd, 2010. "New Reform Strategies and Welfare Participation in Canada," MPRA Paper 26591, University Library of Munich, Germany.
    12. Dorsett, Richard, 2014. "The effect of temporary in-work support on employment retention: Evidence from a field experiment," Labour Economics, Elsevier, vol. 31(C), pages 61-71.
    13. Richard Blundell & Monica Costa Dias & Costas Meghir & Jonathan Shaw, 2016. "Female Labor Supply, Human Capital, and Welfare Reform," Econometrica, Econometric Society, vol. 84, pages 1705-1753, September.
    14. Sarit Cohen-Goldner & Zvi Eckstein, 2008. "Labor Mobility Of Immigrants: Training, Experience, Language, And Opportunities," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 49(3), pages 837-872, August.
    15. Mike Brewer & James Browne & Haroon Chowdry & Claire Crawford, 2011. "The impact of a time-limited, targeted in-work benefit in the medium-term: an evaluation of In Work Credit," IFS Working Papers W11/14, Institute for Fiscal Studies.
    16. Gerard J. van den Berg & Bas van der Klaauw, 2019. "Structural Empirical Evaluation Of Job Search Monitoring," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 60(2), pages 879-903, May.
    17. Efrat TAHAR-KEDEM, 2014. "Is Motivation Essential for Creating New Lifestyles – Management Intervention Model for Female Immigrants from Developing Countries," REVISTA DE MANAGEMENT COMPARAT INTERNATIONAL/REVIEW OF INTERNATIONAL COMPARATIVE MANAGEMENT, Faculty of Management, Academy of Economic Studies, Bucharest, Romania, vol. 15(1), pages 16-30, March.
    18. Guido W. Imbens, 2004. "Nonparametric Estimation of Average Treatment Effects Under Exogeneity: A Review," The Review of Economics and Statistics, MIT Press, vol. 86(1), pages 4-29, February.
    19. Johan Vikström & Geert Ridder & Martin Weidner, 2016. "Bounds On Treatment Effects On Transitions," CeMMAP working papers 17/16, Institute for Fiscal Studies.
    20. Rosa Minhyo Cho, 2009. "The Impact of Maternal Imprisonment on Children’s Educational Achievement: Results from Children in Chicago Public Schools," Journal of Human Resources, University of Wisconsin Press, vol. 44(3).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:econom:v:153:y:2009:i:1:p:1-20. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/jeconom .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.