The dynamic effects of an earnings subsidy for long-term welfare recipients: Evidence from the self sufficiency project applicant experiment
In the Self Sufficiency Project Applicant Experiment, new welfare entrants were informed that if they remained on public assistance for a year they would become eligible to receive a generous earnings subsidy offer. Those who satisfied the waiting period, and then left welfare and began working full time within the following year, were entitled to receive payments for up to 36 months whenever they were off welfare and working full time. A simple optimizing model suggests that the program rules created an unusual sequence of incentives: (1) to prolong the initial spell on welfare for at least 12 months to become eligible for the subsidy offer; (2) to lock in subsidy entitlement by finding full time work and leaving welfare in the 12-24 month period after initial entry; and (3) to choose work over welfare during the three years that subsidies were available. Consistent with these implications, comparisons between the experimental treatment group and a randomly assigned control group show that the program increased welfare participation in the first year after initial entry and lowered it over the following 5 years. We develop an econometric model of welfare participation and program eligibility status that allows us to separately identify the behavioral effects associated with the program rules. We find important responses to all three incentives, and that the program impact persisted after subsidy payments ended, although the effect decayed over time.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
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.:
- Jeremy Lise & Shannon Seitz & Jeffrey Smith, 2015.
"Evaluating search and matching models using experimental data,"
IZA Journal of Labor Economics,
Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 4(1), pages 1-35, December.
- Lise, Jeremy & Seitz, Shannon & Smith, Jeffrey A., 2005. "Evaluating Search and Matching Models Using Experimental Data," IZA Discussion Papers 1717, Institute for the Study of Labor (IZA).
- Jeremy Lise & Shannon Seitz & Jeffrey Smith, 2006. "Evaluating Search and Matching Models Using Experimental Data," Working Papers 1074, Queen's University, Department of Economics.
- Card, David & Sullivan, Daniel G, 1988. "Measuring the Effect of Subsidized Training Programs on Movements in and out of Employment," Econometrica, Econometric Society, vol. 56(3), pages 497-530, May.
- David Card & Daniel Sullivan, 1987. "Measuring the Effect of Subsidized Training Programs on Movements In andOut of Employment," NBER Working Papers 2173, National Bureau of Economic Research, Inc.
- David Card & Dean R. Hyslop, 2005. "Estimating the Effects of a Time-Limited Earnings Subsidy for Welfare-Leavers," Econometrica, Econometric Society, vol. 73(6), pages 1723-1770, November.
- David Card & Dean R. Hyslop, 2004. "Estimating the Effects of a Time Limited Earnings Subsidy for Welfare Leavers," NBER Working Papers 10647, National Bureau of Economic Research, Inc.
- Ham, John C & LaLonde, Robert J, 1996. "The Effect of Sample Selection and Initial Conditions in Duration Models: Evidence from Experimental Data on Training," Econometrica, Econometric Society, vol. 64(1), pages 175-205, January.
- Robert A. Moffitt, 1996. "The effect of employment and training programs on entry and exit from the welfare caseload," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 15(1), pages 32-50.
- 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. Full references (including those not matched with items on IDEAS)