Earnings Supplementation as a Means to Re-integrate the Unemployed
This paper presents evidence from two randomized experiments testing the use of financial incentives to ecourage labour market participation. The Self-Sufficiency Project shows that supplementing earnings from low-paying, full-time jobs can increase employment among single-parents who are long-term welfare recipients, can raise their earnings and incomes, and may entail little net increase in government transfers net of taxes. In the Earnings Supplement Project, however, the offer to partially compensate unemployment insurance recipients who returned to work quickly and experienced earnings losses had no impact on the labour force behaviour of repeat users of UI and only a small and short-lived impact with displaced workers. The paper includes a discussion of the issues that need to be addressed in trying to stimulate work effort using financial incentives and concludes with some lessons drawn from the research findings.
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Volume (Year): 26 (2000)
Issue (Month): s1 (July)
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- 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.
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- Charles Michalopoulos & Philip K. Robins & David Card, 2000. "When Financial Incentives Pay for Themselves: Early Findings from the Self-Sufficiency Project's Applicant Study," JCPR Working Papers 133, Northwestern University/University of Chicago Joint Center for Poverty Research.
- Moffitt, Robert, 1992. "Incentive Effects of the U.S. Welfare System: A Review," Journal of Economic Literature, American Economic Association, vol. 30(1), pages 1-61, March.
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