Incentive Effects of Social Assistance: A Regression Discontinuity Approach

Kevin Milligan and Thomas Lemieux

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: Employment insurance; social assistance and other transfers; Income; pensions; spending and wealth; Labour; Low income and inequality (search for similar items in EconPapers)
Date: 2006-06-14
New Economics Papers: this item is included in nep-lab
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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https://www150.statcan.gc.ca/n1/en/catalogue/11F0019M2006280 (application/pdf)

Related works:
Journal Article: Incentive effects of social assistance: A regression discontinuity approach (2008)
Working Paper: Incentive Effects of Social Assistance: A Regression Discontinuity Approach (2004)
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Persistent link: https://EconPapers.repec.org/RePEc:stc:stcp3e:2006280e

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