The pitfalls of work requirements in welfare-to-work policies: Experimental evidence on human capital accumulation in the Self-Sufficiency Project

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. www.econstor.eu This paper investigates whether policies that encourage recipients to exit welfare for full-time employment influence participation in educational activity. The Self-Sufficiency Project ('SSP') was a demonstration project where long-term welfare recipients randomly assigned to the treatment group were offered a generous earnings supplement if they exited welfare for full-time employment. We find that treatment group members were less likely to upgrade their education along all dimensions: high-school completion, enrolling in a community college or trade school, and enrolling in university. Thus, 'work-first'; policies that encourage full-time employment may reduce educational activity and may have adverse consequences on the long-run earnings capacity of welfare recipients. We also find that there was a substantial amount of educational upgrading in this population. For instance, among high-school dropouts at the baseline, 19% completed their diploma by the end of the demonstration. Finally, we simulate the consequences of the earnings supplement in the absence of adverse effects on educational upgrading. Doing so alters the interpretation of the lessons from the SSP demonstration. Terms of use: Documents in D I S C U S S I O N P A P E R S E R I E SJEL Classification: I38, J08, J24

Welfare to work and subjective well‐being: Evidence from a randomized control trial

“…In Canada, many jurisdictions have moved towards a more "work-first" system of welfare, and one jurisdiction (British Columbia) adopted US-style lifetime limits for welfare use, although the reforms were abandoned two years after implementation. In both countries, welfare caseloads have declined substantially (Blank 2002, Bitler and Hoynes 2010, Hoynes and Stabile 2016, Riddell and Riddell 2020. Empirical analyses also show that welfare reforms in both countries have led to a fall in welfare receipt and an increase in employment (Grogger 2003, Green and Warburton 2004, Berg and Gabel 2015, Riddell and Riddell 2020.…”

“…In both countries, welfare caseloads have declined substantially (Blank 2002, Bitler and Hoynes 2010, Hoynes and Stabile 2016, Riddell and Riddell 2020. Empirical analyses also show that welfare reforms in both countries have led to a fall in welfare receipt and an increase in employment (Grogger 2003, Green and Warburton 2004, Berg and Gabel 2015, Riddell and Riddell 2020. 2 The literature is much less clear about how welfare reform has affected the well-being of single mothers.…”

“…Compelling evidence exists showing that employment rates for single mothers 1 in the US have increased substantially in response to American welfare reform. Canadian evidence suggests that these reforms have lowered income assistance (Berg and Gabel 2015), and evidence from British Columbia and New Brunswick (Riddell and Riddell 2020) is consistent with most of this decline in social assistance receipt being movement into employment. However, it remains an open debate as to how such "work-first" initiatives have influenced well-being (Bitler and Hoynes 2010).…”

Evaluating search and matching models using experimental data

“…8 A large literature considers various aspects of the Self-Sufficiency Project, including Bitler et al (2008), Card and Hyslop (2005), Connolly andGottschalk (2009), Ferrall (2012), Foley and Schwartz (2003), Kamionka and Lacroix (2008), Michalopoulos et al (2005), Riddell and Riddell (2014), and Zabel et al (2013). Similar, but less generous, income supplement programs have been studied in the United States; see Auspos et al (2000) on the Minnesota Family Investment Program and Bos et al (1999) on the Wisconsin New Hope program.…”

Evaluating social assistance reforms under programme heterogeneity and alternative measures of success

“…There has been much discussion over US policy changes, with considerable empirical evidence on the relevant outcomes (for a synthetic overview, see Blank, 2002;Grogger & Karoly, 2005;Moffitt & Ver Ploeg, 2001). Differential effects were found when considering the results of both work-first strategies -trying to push recipients into the labour market as rapidly as possible -and long-term programmes -focused on human capital developments providing intensive training and educational opportunities for recipients (Autor, Houseman, & Pekkala Kerr, 2012;Bloom, Hill, & Riccio, 2003;Dyke, Heinrich, Mueser, & Troske, 2006;Moffitt, 2001;Riddell & Riddell, 2012).…”