TY  - JOUR
AU  - Card,David
AU  - Hyslop,Dean R.
TI  - Estimating the Effects of a Time Limited Earnings Subsidy for Welfare Leavers
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 10647
PY  - 2004
Y2  - July 2004
UR  - http://www.nber.org/papers/w10647
L1  - http://www.nber.org/papers/w10647.pdf
N1  - Author contact info:
David Card
Department of Economics
549 Evans Hall, #3880
University of California, Berkeley
Berkeley, CA  94720-3880
Tel: 510/642-5222
Fax: 510/643-7042
E-Mail: card@econ.berkeley.edu

Dean Hyslop
New Zealand Treasury
PO Box 3724
Wellington
NEW ZEALAND
E-Mail: dean.hyslop@treasury.govt.nz
AB  - In the Self Sufficiency Program (SSP) welfare demonstration, members of a randomly assigned treatment group could receive a subsidy for full time work. The subsidy was available for three years, but only to people who began working full time within 12 months of random assignment. A simple optimizing model suggests that the eligibility rules created an 'establishment' incentive to find a job and leave welfare within a year of random assignment, and an 'entitlement' incentive to choose work over welfare once eligibility was established. Building on this insight, we develop an econometric model of welfare participation that allows us to separate the two effects and estimate the impact of the earnings subsidy on welfare entry and exit rates among those who achieved eligibility. The combination of the two incentives explains the time profile of the experimental impacts, which peaked 15 months after random assignment and faded relatively quickly. Our findings suggest that about half of the peak impact of SSP was attributable to the establishment incentive. Despite the extra work effort generated by SSP the program had no lasting impact on wages, and little or no long run effect on welfare participation.
ER  -