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Is Subsidized Employment Cost Effective for Welfare Recipients? Experimental Evidence from Seven State Demonstrations

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  • Stephen H. Bell
  • Larry L. Orr

Abstract

This paper examines the benefits and costs of training and subsidized employment provided to welfare recipients in demonstration programs in seven states. A classical experimental design is used to estimate the effect of these demonstrations on earnings and welfare benefits over 33 months following program entry. Both effects are substantial and, in some cases, long-lived. When combined with data on program costs, these findings indicate that, while not always cost effective for taxpayers, subsidized employment for welfare recipients does convey positive net benefits to participants and to society as a whole.

Suggested Citation

  • Stephen H. Bell & Larry L. Orr, 1994. "Is Subsidized Employment Cost Effective for Welfare Recipients? Experimental Evidence from Seven State Demonstrations," Journal of Human Resources, University of Wisconsin Press, vol. 29(1), pages 42-61.
    • Handle: RePEc:uwp:jhriss:v:29:y:1994:i:1:p:42-61
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    1. repec:mpr:mprres:6664 is not listed on IDEAS
    2. Witztum, Amos, 2008. "Social attitudes and re-distributive policies," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 37(4), pages 1597-1623, August.
    3. Nan L. Maxwell & Dana Rotz, "undated". "Building the Employment and Economic Self-Sufficiency of the Disadvantaged: The Potential of Social Enterprises," Mathematica Policy Research Reports 37f4ab94fb044cc1945cb04dc, Mathematica Policy Research.
    4. Alexander Gelber & Adam Isen & Judd B. Kessler, 2014. "The Effects of Youth Employment: Evidence from New York City Summer Youth Employment Program Lotteries," NBER Working Papers 20810, National Bureau of Economic Research, Inc.
    5. Antonio Estache & Elena Ianchovichina & Robert Bacon & Ilhem Salamon, 2013. "Infrastructure and Employment Creation in the Middle East and North Africa," World Bank Publications - Books, The World Bank Group, number 12237, December.
    6. Cockx, Bart & Ridder, Geert, 2001. "Social Employment of Welfare Recipients in Belgium: An Evaluation," Economic Journal, Royal Economic Society, vol. 111(470), pages 322-352, April.
    7. Samina Sattar, "undated". "Evidence Scan of Work Experience Programs," Mathematica Policy Research Reports 685b2a650bdf4437b1de31c2e, Mathematica Policy Research.
    8. Schneider, Hilmar & Brenke, Karl & Jesske, Birgit & Kaiser, Lutz C. & Rinne, Ulf & Schneider, Marc & Steinwede, Jacob & Uhlendorff, Arne, 2007. "Evaluation der Maßnahmen zur Umsetzung der Vorschläge der Hartz-Kommission - Bericht 2006," IZA Research Reports 10, Institute of Labor Economics (IZA).
    9. Deuchert, Eva & Kauer, Lukas, 2013. "Hiring subsidies for people with a disability: Helping or hindering? - Evidence from a small scale social field experiment," Economics Working Paper Series 1335, University of St. Gallen, School of Economics and Political Science.
    10. Lawrence F. Katz, 1996. "Wage Subsidies for the Disadvantaged," NBER Working Papers 5679, National Bureau of Economic Research, Inc.
    11. Bruno Contini & Federico Revelli, 2004. "On the Welfare Effect of a Wage Subsidy on Youth Labor: Italy’s CFL Program," LABORatorio R. Revelli Working Papers Series 36, LABORatorio R. Revelli, Centre for Employment Studies.
    12. Geir Smedslund & Kåre Birger Hagen & Asbjørn Steiro & Torill Johme & Therese Kristine Dalsbø & Mons Georg Rud, 2006. "Work Programmes for Welfare Recipients," Campbell Systematic Reviews, John Wiley & Sons, vol. 2(1), pages 1-122.
    13. Daniel Gubits & David Stapleton & Stephen Bell & Michelle Wood & Denise Hoffman & Sarah Croake & David R. Mann & Judy Geyer & David Greenberg & Austin Nichols & Andrew McGuirk & Meg Carroll & Utsav Ka, "undated". "BOND Implementation and Evaluation: Final Evaluation Report, Volume 1," Mathematica Policy Research Reports fac39cd85b944c528e7acbb5d, Mathematica Policy Research.
    14. Amanda Pallais, 2014. "Inefficient Hiring in Entry-Level Labor Markets," American Economic Review, American Economic Association, vol. 104(11), pages 3565-3599, November.
    15. Ianchovichina, Elena & Estache, Antonio & Foucart, Renaud & Garsous, Grégoire & Yepes, Tito, 2013. "Job Creation through Infrastructure Investment in the Middle East and North Africa," World Development, Elsevier, vol. 45(C), pages 209-222.
    16. Kornfeld, Robert & Bloom, Howard S, 1999. "Measuring Program Impacts on Earnings and Employment: Do Unemployment Insurance Wage Reports from Employers Agree with Surveys of Individuals?," Journal of Labor Economics, University of Chicago Press, vol. 17(1), pages 168-197, January.
    17. Steven Raphael & Michael A. Stoll, 2006. "Evaluating the Effectiveness of the Massachusetts Workforce Development System Using No-Shows as a Nonexperimental Comparison Group," Evaluation Review, , vol. 30(4), pages 379-429, August.
    18. Bell, Stephen H. & Orr, Larry L., 2002. "Screening (and creaming?) applicants to job training programs: the AFDC homemaker-home health aide demonstrations," Labour Economics, Elsevier, vol. 9(2), pages 279-301, April.
    19. David Greenberg & Robert Meyer & Charles Michalopoulos & Michael Wiseman, 2003. "Explaining Variation in the Effects of Welfare-To-Work Programs," Evaluation Review, , vol. 27(4), pages 359-394, August.

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