Incentive Effects of Social Assistance: A Regression Discontinuity Approach

Thomas Lemieux () and Kevin Milligan ()

Analytical Studies Branch Research Paper Series from Statistics Canada, Analytical Studies Branch

Abstract: Before 1989, childless social assistance recipients in Quebec under age 30 received much lower benefits than recipients over age 30. We use this sharp discontinuity in policy to estimate the effects of social assistance on various labour market outcomes using a regression discontinuity approach. We find strong evidence that more generous social assistance benefits reduce employment. The estimates exhibit little sensitivity to the degree of flexibility in the specification, and perform very well when we control for unobserved heterogeneity using a first difference specification. Finally, we show that commonly used difference-in-differences estimators may perform poorly with inappropriately chosen control groups.

Keywords: Labour; Income; pensions; spending and wealth; Employment insurance; social assistance and other transfers; Low income and inequality (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-lab
Date: Written 2006-06-14
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http://www.statcan.ca/bsolc/english/bsolc?catno=11F0019MIE2006280 (application/pdf)

Related works:
Working Paper: Incentive Effects of Social Assistance: A Regression Discontinuity Approach (2004)
Journal Article: Incentive effects of social assistance: A regression discontinuity approach (2008)
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