Using data from an evaluation of two welfare-to-work programs in
Riverside, Calif. and Grand Rapids, Mich., we find that requirements
to participate in mandatory welfare-to-work programs can increase
employment and earnings and reduce welfare income, independent
of actual participation in the welfare-to-work program. Usually, these independent effects of the participation
requirements are not captured by estimates of welfare-to-work
program impacts, because program impacts are measured conditional
on the actual showing up of those required to participate. In our analyses, we find larger effects of the mandate
for welfare recipients who are more “job-ready” and for programs
operating in healthier labor markets. We also find evidence that response to a mandate increases
with the strength of enforcement and the level of penalties
for noncompliance. Following welfare reform legislation of 1996, compliance requirements
for welfare-to-work programs have become stricter and penalties
for non-compliance have increased. Consequently, we expect the effects of these mandates
to strengthen.
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