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Assessing the Impact of a Wage Subsidy for Single Parents on Social Assistance

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  • Guy Lacroix

Abstract

In 2002 the Quebec government implemented the Action Emploi" (AE) program aimed at making work pay for long-term social assistance recipients (SA). AE offered a generous income supplement that could last up to three years to recipients who found a full-time job within twelve months. The program was implemented for a trial period of one year. Based on little empirical evidence, a slightly modified version of the program was implemented on a permanent basis in May 2008. The paper investigates the impact of the temporary program by focusing on the labour market transitions of the targeted population starting one year before the implementation of the program and up until the end of 2005. We use a multi-state multi-episode model. The endogeneity of the participation status is accounted for by treating AE as a distinct state and by allowing correlated unobserved factors to affect the transitions. The model is estimated by the method of simulated moments. Our results show that AE has indeed increased the duration of Off-SA spells and decreased the duration of SA spells slightly. There is also some evidence that the response to the program varies considerably with unobserved individual characteristics." En 2002, le gouvernement du Québec a mis sur pied le programme Action emploi (AE) qui visait à mieux rémunérer le travail des prestataires de l'aide sociale (AS) de longue durée. AE offrait un supplément de revenu généreux pouvant s'échelonner sur une période d'au plus trois ans aux prestataires ayant trouvé un emploi à temps plein à l'intérieur de 12 mois. Le programme a été mis en uvre pendant une période d'essai d'un an. Sur la base d'une faible évidence empirique, une version légèrement modifiée du programme a été adoptée de façon permanente en mai 2008. Le document examine l'incidence du programme temporaire en mettant l'accent sur les transitions de la population ciblée sur le marché du travail, à compter de l'année précédant la mise en uvre du programme jusqu'à la fin de 2005. Nous utilisons un modèle multi-états et multi-épisodes. Afin de prendre en compte l'endogénéité du statut de participation, nous considérons que le programme AE est un état distinct et nous permettons à des facteurs latents corrélés d'influencer les transitions. Le modèle est évalué par la méthode du maximum de vraisemblance simulée. Nos résultats démontrent que le programme a effectivement augmenté la durée des périodes de sortie de l'AS et diminué légèrement la durée des périodes de recours à l'AS. Le document montre également que la réponse au programme varie considérablement en fonction des caractéristiques individuelles latentes.

Suggested Citation

  • Guy Lacroix, 2010. "Assessing the Impact of a Wage Subsidy for Single Parents on Social Assistance," CIRANO Working Papers 2010s-19, CIRANO.
  • Handle: RePEc:cir:cirwor:2010s-19
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    File URL: http://www.cirano.qc.ca/files/publications/2010s-19.pdf
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    Cited by:

    1. Nicholas-James Clavet & Jean-Yves Duclos & Guy Lacroix, 2012. "Fighting Poverty: Assessing the Effect of a Guaranteed Minimum Income Proposal in Québec," CIRANO Working Papers 2012s-36, CIRANO.
    2. Tue Gorgens & Dean Hyslop, 2016. "The specification of dynamic discrete-time two-state panel data models," ANU Working Papers in Economics and Econometrics 2016-631, Australian National University, College of Business and Economics, School of Economics.
    3. Rainer Eppel & Helmut Mahringer, 2012. "Do wage subsidies work in boosting economic inclusion? Evidence on e," EcoMod2012 4065, EcoMod.
    4. Fanny Moffette & Dorothée Boccanfuso & Patrick Richard & Luc Savard, 2013. "Estimating the Impact of the Québec’s Work Incentive Program on Labour Supply: An Ex Post Microsimulation Analysis," Cahiers de recherche 13-01, Departement d'Economique de l'École de gestion à l'Université de Sherbrooke.
    5. Rainer Eppel & Helmut Mahringer, 2013. "Do Wage Subsidies Work in Boosting Economic Inclusion? Evidence on Effect Heterogeneity in Austria," WIFO Working Papers 456, WIFO.

    More about this item

    Keywords

    ; assistance sociale; supplément de revenu; modèle de transition multi-états et multi-épisodes.;

    JEL classification:

    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

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