The Self-Sufficiency Project (SSP) is a large-scale social experiment being conducted in Canada to
evaluate the effects of an eamings supplement (or subsidy) for long-term welfare recipients who find a
full-time job and leave income assistance. The supplement is available to single parents who have
received income assistance for a year or more, and typically doubles the gross take-home pay of
recipients. An important concern is whether the availability of the supplement would lead some new
income assistance recipients to prolong their stay on welfare in order to gain eligibility. A separate
experiment was conducted with new welfare recipients to measure the magnitude of this effect. One
half of a group of new recipients were informed that would be eligible to receive SSP if they stayed on
income assistance for a year; the other half were randomly assigned to a control group. Our analysis
indicates a very modest "delayed exit" effect among the treatment group relative to the controls.

This paper presents results from an experimental evaluation of an earnings supplement program offered
to long-term welfare recipients in two Canadian provinces. The program -- known as the Self-Sufficiency
Project - provides a supplement equal to one-half of the difference between an earnings target ($2,500 or
$3083 per month, Canadian dollars, depending on the province) and the individual's actual earnings. The
supplement is similar to a negative income tax with two important differences: (1) eligibility is limited to
long-term welfare recipients who find a full-time job (30 hours per week or more); and (2) the supplement
payment is based on individual earnings rather than family income. The evaluation is based on a
randomized design that will follow 6,000 individuals for five years. Early findings for a first cohort of
2,000 individuals observed over 18 months of program eligibility suggest that the financial incentives of
the Self-Sufficiency Program significantly increase labor market attachment and significantly reduce
welfare participation.