In this paper we analyze the impact of benefits on the length of welfare spells. It introduces a natural experiment approach of comparing the length of welfare spells before and after a major reform of the welfare program that took place in Québec in August 1989. An important feature of this reform was the abolishment of discrimination based on age that applied to single individuals and childless couples below the age of thirty. With the reform, their monthly benefits rose from $173 (in dollars of 1986) to $425, an increase of over 145%. To analyze the impact of the reform, we utilize a semi-parametric duration model with time-varying covariates such as welfare benefits, minimum wage rate, unemployment rate, etc. We find that benefits have an important impact on spell duration of individuals below thirty years of age. We also find that the minimum wage rate has an adverse effect on the duration of individuals in the 18-24 age group, but a positive effect on those in the 25-29 age group. Finally, our estimates suggest that the reform increased duration on welfare by 2 to 4.5 months.
Dans cet article, nous étudions la relation entre le niveau des prestations et la durée de séjour à la sécurité sociale. L'analyse repose sur une approche dite d'expérience naturelle et consiste à comparer la durée de séjour avant et après l'introduction de la réforme majeure qui a eu lieu en 1989 au Québec. Un volet important de cette réforme consistait à éliminer l'écart de prestations entre les individus et les couples sans enfants de moins de trente ans et les bénéficiaires agés de plus de trente ans. Les prestations des moins de trente ans sont ainsi passées de 173$ par mois ($ de 1986) à plus de 425$ par mois, soit une augmentation de 145 %. L'impact de ce changement est analysé à l'aide d'un modèle de durée semi-paramétrique qui incorpore des variables exogènes qui dépendent du temps, tels les prestations, le salaire minimum, le taux de chômage, etc. Par ailleurs, une hausse du salaire minimum a pour effet d'augmenter la durée de séjour à la sécurité sociale des individus âgés entre 18 et 24 ans,0501s de diminuer la durée de séjour de ceux âgés entre 25 et 29 ans. Enfin, nos résultats montrent que la réforme a eu pour effet d'augmenter la durée de séjour d'environ 2 à 4,5 mois.
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Find related papers by JEL classification: I30 - Health, Education, and Welfare - - Welfare and Poverty - - - General J64 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Unemployment: Models, Duration, Incidence, and Job Search
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