Reforming the Financial Incentives of the Welfare System

60 Pages Posted: 6 Jan 2001

See all articles by David Card

David Card

University of California, Berkeley - Department of Economics; Institute for the Study of Labor (IZA); National Bureau of Economic Research (NBER)

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

Card, David E., Reforming the Financial Incentives of the Welfare System (July 2000). Available at SSRN: https://ssrn.com/abstract=250115 or http://dx.doi.org/10.2139/ssrn.250115

David E. Card (Contact Author)

University of California, Berkeley - Department of Economics ( email )

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Institute for the Study of Labor (IZA)

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National Bureau of Economic Research (NBER)

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