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

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  • Lacroix, Guy

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 o ered a generous wage subsidy that could last up to three years to recipients who found a full-time job within twelve months. The program was implemented on an experimental basis for a single year. Based on little empirical evidence, a slightly modi ed version of the program was implemented on 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 a ect the transitions. The model is estimated by the method of simulated moments. Our results show that AE has indeed increased the duration of O -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.

Suggested Citation

  • Lacroix, Guy, 2009. "Assessing the Impact of a Wage Subsidy for Single Parents on Social Assistance," CLSSRN working papers clsrn_admin-2009-35, Vancouver School of Economics, revised 22 Jun 2009.
  • Handle: RePEc:ubc:clssrn:clsrn_admin-2009-35
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    File URL: http://www.clsrn.econ.ubc.ca/workingpapers/CLSRN%20Working%20Paper%20no.%2026%20-%20Guy%20Lacroix.pdf
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    Cited by:

    1. Rainer Eppel & Helmut Mahringer, 2013. "Do Wage Subsidies Work in Boosting Economic Inclusion? Evidence on Effect Heterogeneity in Austria," WIFO Working Papers 456, WIFO.
    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. 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.

    More about this item

    Keywords

    Wage subsidy; multi-state multi-episode transition model; social assistance;

    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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