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The Long-Term Gains from GAIN: A Re-Analysis of the Impacts of the California GAIN Program

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  • V. Joseph Hotz
  • Guido W. Imbens
  • Jacob A. Klerman

Abstract

As part of recent reforms of the welfare programs in the U.S., many states and localities have refocused their Welfare-to-Work programs from an emphasis on human capital acquisition (i.e., providing basic education and vocational training) to an emphasis on "work-first," (i.e., moving welfare recipients into unsubsidized employment as quickly as possible). This change in emphasis has been motivated, in part, by results from the experimental evaluation, conducted by the Manpower Demonstration Research Corporation (MDRC), of California's Greater Avenues to Independence (GAIN) programs during the early 1990s. Their evaluation found that, compared to programs in other countries that emphasized skill accumulation, the work-first program in Riverside County had larger effects on employment, earnings, and welfare receipt. In addition, the Riverside program was cheaper per recipient than the other programs. The paper reexamines the GAIN programs from two complementary perspectives. First, we extend the earlier analysis through nine years post-randomization, which is the longest follow-up of any randomized training program, and find that the stronger impacts of Riverside County's work first program tend to shrink, whereas the weaker impacts for the human capital programs in Alameda and Los Angeles Counties tend to remain constant or even grow over time. Second, we develop and implement methods to allow the comparison of programs implemented by random assignment in different places despite striking differences in the composition of the participant populations. On a substantive level, our reexamination of the GAIN experiment lead us to conclude that although the work first programs were more successful than the human capital accumulation programs in the early years, this relative advantage disappears in later years. On a methodological level, our results suggest that--at least in this welfare context--these methods are a promising approach both for the estimation of program effects from non-experimental data and for extrapolating program results from one location to a different location with a different population mix.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 8007.

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Date of creation: Nov 2000
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Publication status: published as Hotz, V. Joseph, Guido W. Imbens and Jacob A. Klerman. "Evaluating The Differential Effects Of Alternative Welfare-to-Work Training Components: A Reanalysis Of The California GAIN Program," Journal of Labor Economics, 2006, v24(3,Jul), 521-566.
Handle: RePEc:nbr:nberwo:8007

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  1. Heckman, James J & Ichimura, Hidehiko & Todd, Petra, 1998. "Matching as an Econometric Evaluation Estimator," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 65(2), pages 261-94, April.
  2. James Heckman & Hidehiko Ichimura & Jeffrey Smith & Petra Todd, 1998. "Characterizing Selection Bias Using Experimental Data," Econometrica, Econometric Society, Econometric Society, vol. 66(5), pages 1017-1098, September.
  3. Rajeev H. Dehejia & Sadek Wahba, 1998. "Causal Effects in Non-Experimental Studies: Re-Evaluating the Evaluation of Training Programs," NBER Working Papers 6586, National Bureau of Economic Research, Inc.
  4. Heckman, James J & Lochner, Lance & Taber, Christopher, 1998. "General-Equilibrium Treatment Effects: A Study of Tuition Policy," American Economic Review, American Economic Association, American Economic Association, vol. 88(2), pages 381-86, May.
  5. LaLonde, Robert J, 1986. "Evaluating the Econometric Evaluations of Training Programs with Experimental Data," American Economic Review, American Economic Association, American Economic Association, vol. 76(4), pages 604-20, September.
  6. Robert J. LaLonde, 1995. "The Promise of Public Sector-Sponsored Training Programs," Journal of Economic Perspectives, American Economic Association, American Economic Association, vol. 9(2), pages 149-168, Spring.
  7. Rajeev Dehejia, 2000. "Was There a Riverside Miracle? A Framework for Evaluating Multi-Site Programs," NBER Working Papers 7844, National Bureau of Economic Research, Inc.
  8. Heckman, James J. & Lalonde, Robert J. & Smith, Jeffrey A., 1999. "The economics and econometrics of active labor market programs," Handbook of Labor Economics, Elsevier, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 31, pages 1865-2097 Elsevier.
  9. Daniel Friedlander & David H. Greenberg & Philip K. Robins, 1997. "Evaluating Government Training Programs for the Economically Disadvantaged," Journal of Economic Literature, American Economic Association, American Economic Association, vol. 35(4), pages 1809-1855, December.
  10. Heckman, J.J. & Hotz, V.J., 1988. "Choosing Among Alternative Nonexperimental Methods For Estimating The Impact Of Social Programs: The Case Of Manpower Training," University of Chicago - Economics Research Center, Chicago - Economics Research Center 88-12, Chicago - Economics Research Center.
  11. Couch, Kenneth A, 1992. "New Evidence on the Long-Term Effects of Employment Training Programs," Journal of Labor Economics, University of Chicago Press, University of Chicago Press, vol. 10(4), pages 380-88, October.
  12. V. Joseph Hotz & Guido W. Imbens & Julie H. Mortimer, 1999. "Predicting the Efficacy of Future Training Programs Using Past Experiences," NBER Technical Working Papers 0238, National Bureau of Economic Research, Inc.
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