180 research outputs found

    Do Financial Incentives Encourage Welfare Recipients to Work? Evidence from a Randomized Evaluation of the Self-Sufficiency Project

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    This paper reports on a randomized evaluation of an earnings subsidy offered to long-term welfare recipients in Canada. The program -- known as the Self-Sufficiency Project (SSP) -- provides a supplement equal to one-half of the difference between a target earnings level and a participant's actual earnings. The SSP supplement is similar to a negative income tax with two important differences: (1) eligibility is limited to long-term welfare recipients who find a full-time job; and (2) the payment depends on individual earnings rather than family income. Our evaluation is based on a classical randomized design: one half of a group of single parents who had been on welfare for over a year were eligible to receive the SSP supplement, while the other half were assigned to a control group. Results for an early cohort of SSP participants and controls suggest that the financial incentives of the Self-Sufficiency Program increase labor market attachment and reduce welfare participation.

    Have Welfare-To-Work Programs Improved Over Time In Putting Welfare Recipients To Work?

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    Data from 76 experimental welfare-to-work programs conducted in the United States between 1983 and 1998 are used to investigate whether the impacts of such programs on employment had been improving over time and whether specific program features influencing such changes can be identified. Over the period, an increasing percentage of control group members received services similar to those offered to program group members. As a result, differential participation in program service activities between program and control group members decreased steadily over time. This reduction in the net receipt of program services tended to reduce the impact of these programs on employment. However, the negative influence of the reduced incremental services was offset by other factors that resulted in program impacts remaining essentially constant from 1983 to 1998. Suggestions are made for possibly improving program impacts in future experiments.Welfare Programs; Program Evaluation; Employment Behavior of Low-Income Families; Meta Analysis

    Summary and Policy Implications

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    The Limits to Wage Growth: Measuring the Growth Rate of Wages For Recent Welfare Leavers

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    We study the rate of wage growth among welfare leavers in the Self Sufficiency Program (SSP), an experimental earnings subsidy offered to long-term welfare recipients in Canada. Single parents who started working in response to the SSP incentive are younger, less educated, and have more young children than those who would have been working regardless of the program. They also earn relatively low wages in their first few months of work: typically within $1 of the minimum wage. Despite these differences, their rate of wage growth is similar to other welfare leavers. We estimate that people who were induced to work by SSP experienced real wage growth of about 2.5 - 3 percent per year - a rate consistent with conventional measures of the return to experience for similar workers.

    What You Do in High School Matters: The Effects of High School GPA on Educational Attainment and Labor Market Earnings in Adulthood

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    Using abstracted grades and other data from Add Health, we investigate the effects of cumulative high school GPA on educational attainment and labor market earnings among a sample of young adults (ages 24-34). We estimate several models with an extensive list of control variables and high school fixed effects. Results consistently show that high school GPA is a positive and statistically significant predictor of educational attainment and earnings in adulthood. Moreover, the effects are large and economically important for each gender. Interesting and somewhat unexpected findings emerge for race. Various sensitivity tests support the stability of the core findings.High school grades; Educational attainment; Earnings; Panel data

    Private Child Support: Current and Potential Impacts

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    This paper examines the effects of a number of methods for enhancing private child support collections: increasing the proportion of those children potentially eligible for child support who get child support awards; using a uniform standard for determining child support obligations; and collecting a greater percentage of current obligations. The paper also estimates the potential of all three methods used in combination to provide income to needy custodial families. The research demonstrates that the current private child support system falls far short of its potential to transfer income from noncustodial to custodial families. Although the use of a normative standard, improved collections, and extending child support to all those potentially eligible will greatly improve the economic circumstances of impoverished custodial families, private child support cannot be viewed as the sole answer for the economic plight of these families. Increased work opportunities and increased public support are also needed

    Reemployment Bonuses in the Unemployment Insurance System: Evidence from Three Field Experiments

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    In this volume a select group of UI researchers describes the motivation for and the design, implementation, and impacts of UI bonus experiments administered in Illinois, Pennsylvania, and Washington. They also describe the benefits and costs of the various experimental treatments for the government as a whole, the UI system in particular, claimants\u27 earnings, and the overall net benefits to society.https://research.upjohn.org/up_press/1183/thumbnail.jp

    Financial Incentives for Increasing Work and Income Among Low-Income Families

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    This paper investigates the impact of financial incentive programs, which have become an increasingly common component of welfare programs. We review experimental evidence from several such programs. Financial incentive programs appear to increase work and raise income (lower poverty), but cost somewhat more than alternative welfare programs. In particular, windfall beneficiaries -- those who would have been working anyway -- can raise costs by participating in the program. Several existing programs limit this effect by targeting long-term welfare recipients or by limiting benefits to full-time workers. At the same time, because financial incentive programs transfer support to working low-income families, the increase in costs due to windfall beneficiaries makes these programs more effective at alleviating poverty and raising incomes. Evidence also indicates that combining financial incentive programs with job search and job support services can increase both employment and income gains. Non-experimental evidence from the Earned Income Tax Credit (EITC) and from state Temporary Assistance to Needy Families (TANF) programs with enhanced earnings disregards also suggests that these programs increase employment, and this evidence is consistent with the experimental evidence on the impact of financial incentive programs.
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