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Explaining and Forecasting Results of The Self-Sufficiency Project

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  • Christopher Ferrall

    ()
    (Queen's University)

Abstract

This paper models the Self-Sufficiency Project (SSP), a controlled randomized experiment concerning welfare. The model of household behavior includes stochastic labor market skill, job opportunities, and value of non-labor market time. All the variation within and between treatment groups, jurisdictions (provinces), demographic groups, and sub-experiments is derived from four underlying sources: policy variation, endogenous selection into the experimental samples, the SSP treatments themselves, and different mixtures over 4 underlying types. Using the variation within the treatment group is quantitatively important for identifying the complex model: Efficient GMM the parameters are estimated precisely and variation within the treatment group is much more important for identification than either variation within the control group or between treatment and control groups. The model tracks the primary moments well within sample and out-of-sample except for under-estimating the difference in the entry sample. Predictions of the estimated model are computed for different welfare reform experiments. The details of the design are critical for interpretation of the results and it appears that the small SSP+ treatment may have longer lasting impacts than the an in-sample impact analysis would suggest.

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File URL: http://qed.econ.queensu.ca/working_papers/papers/qed_wp_1165.pdf
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Bibliographic Info

Paper provided by Queen's University, Department of Economics in its series Working Papers with number 1165.

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Length: 70 pages
Date of creation: May 2008
Date of revision:
Handle: RePEc:qed:wpaper:1165

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Keywords: Dynamic Household Behavior; Welfare Policy; Controlled Experiments; GMM;

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  1. John Kennan & James R. Walker, 2003. "The Effect of Expected Income on Individual Migration Decisions," NBER Working Papers 9585, National Bureau of Economic Research, Inc.
  2. M. Keane & R. Mofitt, 1995. "A Structural Model of Multiple Welfare Program Participation and Labor Supply," Working Papers 95-4, Brown University, Department of Economics.
  3. Lise, Jeremy & Seitz, Shannon & Smith, Jeffrey A., 2003. "Equilibrium Policy Experiments and the Evaluation of Social Programs," IZA Discussion Papers 758, Institute for the Study of Labor (IZA).
  4. Christopher Ferrall, 2002. "Estimation and Inference in Social Experiments," General Economics and Teaching 0209001, EconWPA.
  5. Christopher Ferrall, 2005. "Solving Finite Mixture Models: Efficient Computation in Economics Under Serial and Parallel Execution," Computational Economics, Society for Computational Economics, vol. 25(4), pages 343-379, June.
  6. Hanming Fang & Dan Silverman, 2007. "Time-Inconsistency and Welfare Program Participation: Evidence from the NLSY," NBER Working Papers 13375, National Bureau of Economic Research, Inc.
  7. Moffitt, Robert, 1983. "An Economic Model of Welfare Stigma," American Economic Review, American Economic Association, vol. 73(5), pages 1023-35, December.
  8. David Card & Philip Robins, 1996. "Do Financial Incentives Encourage Welfare Recipients to Work? Early Findings from the Canadian Self Sufficiency Project," Working Papers 738, Princeton University, Department of Economics, Industrial Relations Section..
  9. Christopher J. Flinn, 2006. "Minimum Wage Effects on Labor Market Outcomes under Search, Matching, and Endogenous Contact Rates," Econometrica, Econometric Society, vol. 74(4), pages 1013-1062, 07.
  10. Kenneth I. Wolpin & Petra E. Todd, 2006. "Assessing the Impact of a School Subsidy Program in Mexico: Using a Social Experiment to Validate a Dynamic Behavioral Model of Child Schooling and Fertility," American Economic Review, American Economic Association, vol. 96(5), pages 1384-1417, December.
  11. Michael P. Keane & Kenneth I. Wolpin, 2002. "Estimating Welfare Effects Consistent with Forward-Looking Behavior. Part II: Empirical Results," Journal of Human Resources, University of Wisconsin Press, vol. 37(3), pages 600-622.
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  1. GMM and its application outside finance
    by Chris Auld in ChrisAuld.com on 2013-10-21 19:55:38
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Cited by:
  1. Christopher Ferrall, 2002. "Estimation and Inference in Social Experiments," General Economics and Teaching 0209001, EconWPA.
  2. Marc K Chan, 2014. "Welfare Dependence and Self-Control: An Empirical Analysis," Working Paper Series 19, Economics Discipline Group, UTS Business School, University of Technology, Sydney.

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