The Duration of Spells on Welfare and Off-welfare among Lone Mothers in Ontario

This paper provides a first look at the dynamics of social assistance use among lone mothers in Ontario. We use an administrative caseload data set to analyse the relationship between the duration of spells, both on welfare and off welfare, and a series of factors including the clients’ personal characteristics, their history of welfare use, the duration of current spells, labour market conditions and social assistance benefit levels. We find mixed evidence concerning the key policy question of the scarring or stigmatizing effects of welfare, that is, a “welfare trap”. There is evidence that the likelihood of exiting welfare declines during the first year of a spell. The support is weakest, however, in our preferred specification. There is more consistent evidence that the likelihood of returning to welfare declines during the first year after an exit, that is, staying off the rolls has the beneficial effect of making recidivism less likely. Clients who have spent more months on welfare in the past (controlling for age) do appear to have somewhat longer future spells on welfare and to return more quickly to the rolls once they leave, but the magnitude of this effect is very small. The length of both welfare and off-welfare spells is very sensitive to the levels of welfare benefits. Most of the other coefficients have significant effects of the expected sign. Welfare spells tend to be longer for those lone mothers who are younger, poorly educated, never married, not employable and for those who have more and younger children. Spell lengths also increase with the level of the unemployment rate and decrease with the level of the minimum wage. Off-welfare spells tend to be shorter (the return to welfare more rapid) for those lone mothers who are older, never married, not employable and who have very young children. Off- welfare spells are longer when the minimum wage is higher.