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Financial Incentives for Increasing Work and Income Among Low- Income Families

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Author Info
Rebecca M. Blank (Northwestern University)
David Card (University of California, Berkeley)
Philip K. Robins (University of Miami)

Additional information is available for the following registered author(s):

Abstract

This paper investigates the impact of financial incentive programs, which have become an increasingly common component of welfare programs. We review experimental evidence from several such programs. Financial incentive programs appear to increase work and raise income (lower poverty), but cost somewhat more than alternative welfare programs. In particular, windfall beneficiaries -- those who would have been working anyway -- can raise costs by participating in the program. Several existing programs limit this effect by targeting long-term welfare recipients or by limiting benefits to full-time workers. At the same time, because financial incentive programs transfer support to working low-income families, the increase in costs due to windfall beneficiaries makes these programs more effective at alleviating poverty and raising incomes. Evidence also indicates that combining financial incentive programs with job search and job support services can increase both employment and income gains. Non-experimental evidence from the Earned Income Tax Credit (EITC) and from state Temporary Assistance to Needy Families (TANF) programs with enhanced earnings disregards also suggests that these programs increase employment, and this evidence is consistent with the experimental evidence on the impact of financial incentive program.

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File URL: http://129.3.20.41/eps/hew/papers/9902/9902002.pdf
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Publisher Info
Paper provided by EconWPA in its series HEW with number 9902002.

Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Length: 45 pages
Date of creation: 18 Feb 1999
Date of revision:
Handle: RePEc:wpa:wuwphe:9902002

Note: Type of Document - Acrobat.pdf; pages: 45; figures: included
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Web page: http://129.3.20.41

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Related research
Keywords: welfare reform; female labor supply; financial incentives;

Other versions of this item:

Find related papers by JEL classification:
I3 - Health, Education, and Welfare - - Welfare and Poverty
J2 - Labor and Demographic Economics - - Demand and Supply of Labor

References listed on IDEAS
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. 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.. [Downloadable!]
  2. Nada Eissa & Hilary Williamson Hoynes, 1998. "The Earned Income Tax Credit and the Labor Supply of Married Couples," NBER Working Papers 6856, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  3. Jeffrey B. Liebman, 1998. "The Impact of the Earned Income Tax Credit on Incentives and Income Distribution," NBER Chapters, in: Tax Policy and the Economy, Volume 12, pages 83-120 National Bureau of Economic Research, Inc. [Downloadable!]
  4. Eissa, Nada & Liebman, Jeffrey B, 1996. "Labor Supply Response to the Earned Income Tax Credit," The Quarterly Journal of Economics, MIT Press, vol. 111(2), pages 605-37, May. [Downloadable!] (restricted)
    Other versions:
  5. Rebecca M. Blank & Patricia Ruggles, 1993. "When Do Women Use AFDC & Food Stamps? The Dynamics of Eligibility vs. Participation," NBER Working Papers 4429, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  6. Card, David & Robins, Philip K., 2005. "How important are "entry effects" in financial incentive programs for welfare recipients? Experimental evidence from the Self-Sufficiency Project," Journal of Econometrics, Elsevier, vol. 125(1-2), pages 113-139. [Downloadable!] (restricted)
  7. Lara D. Shore-Sheppard, 2005. "Stemming the Tide? The Effect of Expanding Medicaid Eligibility on Health Insurance," NBER Working Papers 11091, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  8. Moffitt, Robert, 1983. "An Economic Model of Welfare Stigma," American Economic Review, American Economic Association, vol. 73(5), pages 1023-35, December. [Downloadable!] (restricted)
  9. Lara Shore-Sheppard, 1996. "Stemming the Tide? The Effect of Expanding Medicaid Eligibility on Health Insurance Coverage," Working Papers 740, Princeton University, Department of Economics, Industrial Relations Section.. [Downloadable!]
  10. Daniel Friedlander & David H. Greenberg & Philip K. Robins, 1997. "Evaluating Government Training Programs for the Economically Disadvantaged," Journal of Economic Literature, American Economic Association, vol. 35(4), pages 1809-1855, December. [Downloadable!] (restricted)
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