TY  - JOUR
AU  - Lemieux,Thomas
AU  - Milligan,Kevin
TI  - Incentive Effects of Social Assistance: A Regression Discontinuity Approach
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 10541
PY  - 2004
Y2  - June 2004
UR  - http://www.nber.org/papers/w10541
L1  - http://www.nber.org/papers/w10541.pdf
N1  - Author contact info:
Thomas Lemieux
Department of Economics
Vancouver School of Economics
University of British Columbia
#997-1873 East Mall
Vancouver, BC V6T 1Z1
CANADA
Tel: 604/822-2092
Fax: 604/822-5915
E-Mail: thomas.lemieux@ubc.ca

Kevin S. Milligan
Department of Economics
University of British Columbia
#997-1873 East Mall
Vancouver, BC V6T 1Z1
CANADA
Tel: 604/822-6747
Fax: 604/822-5915
E-Mail: kevin.milligan@ubc.ca
AB  - We examine the incentive effects of transfer programs using a unique policy episode. Prior to 1989, social assistance recipients without children in Quebec who were under age 30 received benefits 60 percent lower than recipients older than 30. We use this sharp discontinuity in policy to estimate the effects of social assistance on various labour market outcomes and on living arrangements using a regression discontinuity approach. We find strong evidence that more generous social assistance benefits reduce employment, and more suggestive evidence that they affect marital status and living arrangements. The regression discontinuity estimates exhibit little sensitivity to the degree of flexibility in the specification, and perform very well when we control for unobserved heterogeneity using a first difference specification. Finally, we show that commonly used difference-in-difference estimators may perform poorly when control groups are inappropriately chosen.
ER  -