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An Econometric Analysis of the Impact of the Self-Sufficiency Project on the Employment Behaviour of Former Welfare Recipients

  • Zabel, Jeffrey

    ()

    (Tufts University)

  • Schwartz, Saul

    ()

    (Carleton University)

  • Donald, Stephen

    ()

    (University of Texas at Austin)

The Self-Sufficiency Project (SSP) was a Canadian research and demonstration project that attempted to “make work pay” for long-term income assistance (IA) recipients by supplementing their earnings. The long-term goal of SSP was to get lone parents permanently off IA and into the paid labour force. The purpose of this study is to evaluate the impact of SSP on employment and non-employment durations and its overall effect on employment rates. We focus on generating estimates of the “effect of the treatment on the treated” (TOT) where the “treated” are those in the program group who qualified for the earnings supplement by finding a full-time job during the qualifying period (a group we call the “take-up” group). To obtain a consistent estimate of TOT we follow the work of Ham and LaLonde (1996) and Eberwein, Ham and Lalonde (1997) in estimating a joint model of non-employment and employment durations that controls for unobserved heterogeneity and non-random selection into work and into the take-up group. We find evidence of significant impacts of SSP on non-employment and employment durations. Simulation results show a TOT on the employment rate at 52 months after baseline of approximately 4 percentage points; a 10 percent increase compared to the control group. Further, this estimate of TOT using the results from our econometric model is 5 percentage points higher than the estimate from the raw data.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 2122.

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Length: 38 pages
Date of creation: May 2006
Date of revision:
Handle: RePEc:iza:izadps:dp2122
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  1. Peter Gottschalk, 2005. "Can work alter welfare recipients' beliefs?," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 24(3), pages 485-498.
  2. Meyer, Bruce D, 1996. "What Have We Learned from the Illinois Reemployment Bonus Experiment?," Journal of Labor Economics, University of Chicago Press, vol. 14(1), pages 26-51, January.
  3. Ondrich, Jan & Rhody, Stephen E., 1999. "Multiple spells in the Prentice-Gloeckler-Meyer likelihood with unobserved heterogeneity," Economics Letters, Elsevier, vol. 63(2), pages 139-144, May.
  4. Baker, Michael & Melino, Angelo, 2000. "Duration dependence and nonparametric heterogeneity: A Monte Carlo study," Journal of Econometrics, Elsevier, vol. 96(2), pages 357-393, June.
  5. David Card & Charles Michalopoulos & Philip K. Robins, 2001. "The Limits to Wage Growth: Measuring the Growth Rate of Wages For Recent Welfare Leavers," NBER Working Papers 8444, National Bureau of Economic Research, Inc.
  6. Eberwein, Curtis & Ham, John C & LaLonde, Robert J, 1997. "The Impact of Being Offered and Receiving Classroom Training on the Employment Histories of Disadvantaged Women: Evidence from Experimental Data," Review of Economic Studies, Wiley Blackwell, vol. 64(4), pages 655-82, October.
  7. 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.
  8. 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.
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