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Human Capital and Welfare Dynamics in Canada

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  • Hansen Jorgen

    (Concordia University)

Abstract

This paper analyzes the effects of human capital on welfare dynamics in Canada using data from the Self-Sufficiency Project (SSP). SSP offered a time-limited earnings supplement to a randomly assigned group of new welfare applicants who remained on welfare for one year and, in the subsequent year, left welfare for full-time employment. The results suggest that high school completion has no significant impact on the exit rate from welfare or on the re-entry rate. Moreover, full-time work experience is found to reduce the risk of returning to welfare but not for respondents who were assigned to the treatment group. This finding suggests that the provision of an earnings subsidy encourages welfare recipients to accept low-wage jobs with little gains from work experience. Thus, the rationale for such a policy that work today will raise experience and consequently future wages is not supported by the results in this paper.

Suggested Citation

  • Hansen Jorgen, 2007. "Human Capital and Welfare Dynamics in Canada," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 7(1), pages 1-29, June.
    • Handle: RePEc:bpj:bejeap:v:7:y:2007:i:1:n:27
    DOI: 10.2202/1935-1682.1675
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    References listed on IDEAS

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    1. Fortin, Bernard & Lacroix, Guy & Drolet, Simon, 2004. "Welfare benefits and the duration of welfare spells: evidence from a natural experiment in Canada," Journal of Public Economics, Elsevier, vol. 88(7-8), pages 1495-1520, July.
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    Cited by:

    1. Joanna Tyrowicz & Lucas van der Velde, 2017. "When the opportunity knocks: large structural shocks and gender wage gaps," GRAPE Working Papers 2, GRAPE Group for Research in Applied Economics.
    2. Karolina Goraus & Joanna Tyrowicz & Lucas van der Velde, 2017. "How (Not) to make women work?," GRAPE Working Papers 1, GRAPE Group for Research in Applied Economics.
    3. Karolina Goraus & Joanna Tyrowicz, 2013. "The Goodwill Effect? Female Access to the Labor Market Over Transition: A Multicountry Analysis," Working Papers 2013-19, Faculty of Economic Sciences, University of Warsaw.
    4. Nathan Berg & Todd Gabel, 2013. "Effects of New Welfare Reform Strategies on Welfare Participation: Microdata Estimates from Canada," Working Papers 1304, University of Otago, Department of Economics, revised Feb 2013.

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