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The Limits to Wage Growth: Measuring the Growth Rate of Wages For Recent Welfare Leavers

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Author Info
David Card
Charles Michalopoulos
Philip K. Robins

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Abstract

We study the rate of wage growth among welfare leavers in the Self Sufficiency Program (SSP), an experimental earnings subsidy offered to long-term welfare recipients in Canada. Single parents who started working in response to the SSP incentive are younger, less educated, and have more young children than those who would have been working regardless of the program. They also earn relatively low wages in their first few months of work: typically within $1 of the minimum wage. Despite these differences, their rate of wage growth is similar to other welfare leavers. We estimate that people who were induced to work by SSP experienced real wage growth of about 2.5 - 3 percent per year - a rate consistent with conventional measures of the return to experience for similar workers.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 8444.

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Date of creation: Aug 2001
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Handle: RePEc:nbr:nberwo:8444

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Find related papers by JEL classification:
J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
I38 - Health, Education, and Welfare - - Welfare and Poverty - - - Government Programs; Provision and Effects of Welfare Programs

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Heckman, James J, 1979. "Sample Selection Bias as a Specification Error," Econometrica, Econometric Society, vol. 47(1), pages 153-61, January. [Downloadable!] (restricted)
  2. James Heckman & Hidehiko Ichimura & Jeffrey Smith & Petra Todd, 1998. "Characterizing Selection Bias Using Experimental Data," Econometrica, Econometric Society, vol. 66(5), pages 1017-1098, September.
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  3. Heckman, James J. & Robb, Richard Jr., 1985. "Alternative methods for evaluating the impact of interventions : An overview," Journal of Econometrics, Elsevier, vol. 30(1-2), pages 239-267. [Downloadable!] (restricted)
  4. Timothy J. Bartik, 1997. "Short-Term Employment Persistence for Welfare Recipients: The "Effects" of Wages, Industry, Occupation and Firm," Staff Working Papers 97-46, W.E. Upjohn Institute for Employment Research. [Downloadable!] (restricted)
  5. Ahn, Hyungtaik & Powell, James L., 1993. "Semiparametric estimation of censored selection models with a nonparametric selection mechanism," Journal of Econometrics, Elsevier, vol. 58(1-2), pages 3-29, July. [Downloadable!] (restricted)
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  1. Jeffrey Grogger, 2005. "Welfare Reform, Returns to Experience, and Wages: Using Reservation Wages to Account for Sample Selection Bias," NBER Working Papers 11621, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  2. Marianne P. Bitler & Jonah B. Gelbach & Hilary W. Hoynes, 2005. "Distributional Impacts of the Self-Sufficiency Project," NBER Working Papers 11626, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  3. Jeffrey Zabel & Saul Schwartz & Stephen Donald, 2006. "An Econometric Analysis of the Impact of the Self-Sufficiency Project on the Employment Behaviour of Former Welfare Recipients," IZA Discussion Papers 2122, Institute for the Study of Labor (IZA). [Downloadable!]
  4. V. Joseph Holtz & Charles H. Mullin & John Karl Scholz, 2002. "Welfare, Employment, and Income: Evidence on the Effects of Benefit Reductions from California," American Economic Review, American Economic Association, vol. 92(2), pages 380-384, May. [Downloadable!] (restricted)
  5. Lydon, Reamonn & Walker, Ian, 2004. "Welfare-to-Work, Wages and Wage Growth," IZA Discussion Papers 1144, Institute for the Study of Labor (IZA). [Downloadable!]
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  6. Rebecca M. Blank, 2002. "Evaluating Welfare Reform in the United States," NBER Working Papers 8983, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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