Would Financial Incentives for Leaving Welfare Lead Some People to Stay on Welfare Longer? An Experimental Evaluation of 'Entry Effects' in the Self-Sufficiency Project


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.

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