Using Administrative Data to Examine the Efficacy of Welfare-to-Work Programs

This paper investigates the feasibility of measuring the efficacy of programs designed to move welfare recipients into jobs using administrative records on individual program participation linked with state records on individual earnings. Like many states, Missouri collects quarterly earnings for all individuals covered by its unemployment insurance system. We have linked this information to administrative records listing participants in the FUTURES program, Missouri's welfare-to-work program developed under federal JOBS legislation. We are able to distinguish those forced to participate in the program from those who chose to participate. In addition, since a waiting list was used to allocate individuals to the program during the period of our study, those on the waiting list who were not chosen to receive services may serve as a control group. Our analysis indicates that volunteers and required participants differ in ways consistent with administrative rules. The process by which individuals were selected from the waiting list also reflected such rules. Selection did not appear to favor those whose characteristics would suggest employment success. Estimates of program impact on participant earnings underscore the importance of controlling for a variety of characteristics, in particular prior earnings and employment experience, and of distinguishing volunteers from those required to participate. Ordinary least squares estimates of program impact are modest but positive and statistically significant, and they are generally consistent with expectations. Instrumental variables estimates are similar, suggesting that individual differences in willingness to remain on the waiting list are not an important source of bias in estimated impact.