IZA DP No. 4134 Assessing the Impact of a Wage Subsidy for Single Parents on Social Assistance in Canada (original) (raw)
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Assessing the Impact of a Wage Subsidy for Single Parents on Social Assistance in Canada
Cahiers de recherche, 2009
Assessing the Impact of a Wage Subsidy for Single Parents on Social Assistance in Canada * In 2002 the Quebec government implemented the "Action Emploi" (AE) program aimed at making work pay for long-term social assistance recipients (SA). AE offered 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 modified 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 affect the transitions. The model is estimated by the method of simulated moments. Our results show that AE has indeed increased the duration of Off-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.
Assessing the impact of a wage subsidy for single parents on social assistance
Canadian Journal of Economics-revue Canadienne D Economique, 2010
In 2002 the Quebec government implemented the "Action Emploi" (AE) program aimed at making work pay for long-term social assistance recipients (SA). AE offered 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 modified 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 affect the transitions. The model is estimated by the method of simulated moments. Our results show that AE has indeed increased the duration of Off-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.
Canadian Journal of Economics-revue Canadienne D Economique, 2011
Abstract This paper studies the impact of a wage subsidy program aimed at long-term social assistance recipients in Quebec. The program closely mimics the Self-Sufficiency Project and was implemented for a trial period of one year in 2002.We focus on the labour market transitions of the targeted population starting one year before the implementation of the program and until the end of 2005. Our results show that the duration of spells off social assistance increased, while the duration of social assistance spells decreased slightly. The response to the program varies considerably with both observed and unobserved characteristics.Ce texte étudie l’impact d’un programme de subvention salariale visant les bénéficiaires d’aide sociale de longue durée au Québec. Le programme ressemble grandement au Projet de l’autosuffisance et a été mis en place pour une période d’essai d’un an en 2002. On se concentre sur les transitions sur le marché du travail de la population cible pour la période qui va d’un an avant la mise en place du programme jusqu’à la fin de 2005. Les résultats montrent que la durée des périodes hors de l’aide sociale a augmenté et que la durée de périodes où l’aide sociale est collectée a diminué légèrement. La réponse au programme varie grandement selon les caractéristiques observables et non-observables.
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In 1998, the Canadian government introduced a new child tax credit. The innovation in the program was its integration with social assistance (welfare). Some provinces agreed to subtract the new federally-paid benefits from provincially-paid social assistance, partially lowering the welfare wall. Three provinces did not integrate benefits, providing a quasi-experimental framework for estimation. We find large changes in social assistance take-up and employment in provinces that provided the labour market incentives to do so. In our sample, the integration of benefits can account for around one third of the total decline in social assistance receipt between 1997 and 2000.
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We thank Joshua Lewis for excellent research assistance, and the staffs of the Toronto and B.C. Research Data Centres for their technical support. This paper represents the views of the authors and does not necessarily reflect the views of Statistics Canada. 1 See Joseph V. Hotz and John Karl Scholz (2003) for a review of the US literature on the EITC. Kevin Milligan and Mark Stabile (2007) study Canadian child benefits. Herwig Immervoll et al. (2007) provide some detail on European programs.
Who was affected by new welfare reform strategies? Microdata estimates from Canada
Applied Economics, 2016
A heterogeneous mix of aggressive welfare reforms took effect in different provinces and years starting in the 1990s. Welfare participation rates subsequently declined. Previous investigations of these declines focused on cuts in benefits and stricter eligibility requirements. This article focuses instead on work requirements, diversion, earning exemptions and time limitsreferred to jointly as new welfare reform strategieswhile controlling for benefit levels, eligibility requirements, province-specific labour market conditions and GDP growth, as well as individual-level socioeconomic information. Province-year-specific variation in new reform strategies produce estimates implying that their presence is associated with a large decline in welfare participation of 1.3 percentage points (14% relative to the unconditional mean participation rate of 9.2%). Our coding scheme generates new measures of policy variation that distinguish reductions in benefit levels and tighter eligibility restrictions from new welfare reform strategies, helping identify how different subpopulations responded to different kinds of welfare reforms. Estimates from 46 subpopulations demonstrate that immigrants, native Canadians, single parents and disabled people were substantially more likely to be affected by aggressive new attempts to limit welfare participation than other Canadians receiving social assistance.
National Bureau of Economic Research, 2008
This research has been supported by a CLSRN grant. We thank Josh Lewis for excellent research assistance. We also thank seminar participants at Alberta, Cornell, McGill, RAND, and Simon Fraser, as well as lunch workshop participants at UBC and several conference participants and discussants for many very helpful suggestions. This paper represents the views of the authors and does not necessarily reflect the views of Statistics Canada. The data used in his article can be obtained through application to Statistics Canada's Research Data Centre program at http://www.statcan.ca/english/rdc/index.htm. The views expressed herein are those of the author(s) and do not necessarily reflect the views of the National Bureau of Economic Research. NBER working papers are circulated for discussion and comment purposes. They have not been peerreviewed or been subject to the review by the NBER Board of Directors that accompanies official NBER publications.
Employment and child-care choices of single-parent families in Canada and the United States
Journal of Population Economics, 2002
In this paper we examine employment and child-care choices of two-parent families with young children in the United States and Canada, using a pooled data set based on recent national surveys in each country. We find that the employment and child-care choices of Canadian families are similar to those of U.S. families. Estimates of a model of employment and child-care choices indicate significant effects of child-care subsidies, child-care prices, and wage rates on employment and child-care choices. However, none of these factors helps to explain the differences in employment and child-care choices between the two countries.