The Econometric SocietyEdited by: Guido W. Imbens • Print ISSN: 0012-9682 • Online ISSN: 1468-0262
Econometrica: Nov, 2005, Volume 73, Issue 6
https://doi.org/10.1111/j.1468-0262.2005.00637.x
p. 1723-1770
David Card, Dean R. Hyslop
In the Self Sufficiency Project (SSP) welfare demonstration, members of a randomly assigned treatment group could receive a subsidy for full‐time work. The subsidy was available for 3 years, but only to people who began working full time within 12 months of random assignment. A simple optimizing model suggests that the eligibility rules created an “establishment” incentive to find a job and leave welfare within a year of random assignment, and an “entitlement” incentive to choose work over welfare once eligibility was established. Building on this insight, we develop an econometric model of welfare participation that allows us to separate the two effects and estimate the impact of the earnings subsidy on welfare entry and exit rates among those who achieved eligibility. The combination of the two incentives explains the time profile of the experimental impacts, which peaked 15 months after random assignment and faded relatively quickly. Our findings suggest that about half of the peak impact of SSP was attributable to the establishment incentive. Despite the extra work effort generated by SSP, the program had no lasting impact on wages and little or no long‐run effect on welfare participation.
1. Extra-figureA shows the SSP impacts (treatment minus control group means) for IA for all individuals and for 2 subgroups: those with less than a high school education, and those with a high school education or higher. This is created by treat_byed.sas reading from wide54r data set 2. Extra-figureB shows the simulated SSP impacts from the normal heterogeneity model (column 4 of Table 6) for two "types": people with a random effect equal to the 20th percentile of the heterogeneity distribution (which is N(0, 1.18)); and people with a random effect equal to the 80thpercentile of the heterogeneity distribution. See sim8020.sas 3. Extra-figureC shows the actual hazard rate into SSP eligibility, and the predicted rate from the the normal heterogeneity model (column 4 of Table 6). See extra-figc.xls
This archive contains subdirectories with various materials: 1) additional 2) dataprep Includes programs to read the original data, and create table 2 of the paper. 3) wages Includes programs to construct table 3 and figures 4 and 5. 4) Files on data preparation. Programs and output for figures 4, 5, 7, 8 and 11, and tables 3-7.
This is a an appendix specifying the theoretical model outlined in the text.
March 5, 2024
The terms of the Editors of the Econometric Society's three journals end June 30, 2025. We are pleased to announce the incoming Editors and to thank the outgoing Editors for their excellent and continuing service.
Econometrica: Since 2019, Guido Imbens has served as the 14th Editor of Econometrica. On July 1, 2025, Marina Halac will become the Editor.
Quantitative Economics: Stéphane Bonhomme has been the Editor of Quantitative Economics since 2021. His successor will be Bernard Salanié.
Theoretical Economics: The Editor of Theoretical Economics since 2021 has been Simon Board. Taking over for him in July 2025 will be Federico Echenique.
Guido, Stéphane, and Simon have been outstanding Editors. We are grateful to them for the work they have done and will continue to do, and we look forward to further congratulating them next year. We believe Marina, Bernard, and Federico will be outstanding successors and we thank them in advance for their service.
Finally, we are grateful to Larry Samuelson for chairing all three search committees, and we thank the search committee members for their hard and fruitful work:
Econometrica: Christian Dustmann, Lars Hansen, Alessandro Lizzeri, George Mailath, Ariel Pakes, Helene Rey, and Elie Tamer.
QE: Kate Ho, Michael Keane, Felix Kubler, Whitney Newey, and Frank Schorfheide.
TE: Jeff Ely, Johannes Horner, Gilat Levy, Meg Meyer, and Ran Spiegler.
