Incentive Effects of Social Assistance: A Regression Discontinuity Approach / Thomas Lemieux, Kevin Milligan.

Format:

Book

Author/Creator:

Lemieux, Thomas.

Contributor:

National Bureau of Economic Research.

Milligan, Kevin.

Series:

Working Paper Series (National Bureau of Economic Research) no. w10541.

NBER working paper series no. w10541

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Incentive Effects of Social Assistance

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2004.

Summary:

We examine the incentive effects of transfer programs using a unique policy episode. Prior to 1989, social assistance recipients without children in Quebec who were under age 30 received benefits 60 percent lower than recipients older than 30. We use this sharp discontinuity in policy to estimate the effects of social assistance on various labour market outcomes and on living arrangements using a regression discontinuity approach. We find strong evidence that more generous social assistance benefits reduce employment, and more suggestive evidence that they affect marital status and living arrangements. The regression discontinuity 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-difference estimators may perform poorly when control groups are inappropriately chosen.

Notes:

Print version record

June 2004.