Reforming the Financial Incentives of the Welfare System
60 Pages Posted: 6 Jan 2001
Date Written: July 2000
Abstract
This paper summarizes the findings from the Self Sufficiency Project: a large scale social experiment that is being conducted in Canada to evaluate the effect of high-powered financial incentives for full time work among former welfare recipients. The experimental results confirm the importance of financial incentives in the welfare participation and work decisions of low-income single mothers. Enhanced incentives induce a significant fraction of welfare recipients to leave the program and enter work. They also have a relatively large anti-poverty effect. Moreover, when incentives are offered to relatively short-term recipients, they can actually save the government money.
Keywords: Welfare reform, financial incentives
JEL Classification: I38
Suggested Citation: Suggested Citation
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