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Report

When Financial Incentives Pay for Themselves

Early Findings from the Self-Sufficiency Project's Applicant Study

05/1999
| David Card, Charles Michalopoulos, Philip K. Robins

This is the latest in a series of reports published on the Self-Sufficiency Project (SSP), a test in Canada of a “making work pay” strategy to encourage work among long-term welfare recipients. This report presents interim findings from the “applicant study,” focusing on new applicants for welfare — one of the three experiments that make up SSP

Increases in full-time employment and earnings and the reductions in poverty that resulted from SSP’s supplement offer are among the largest ever seen in a social experiment designed to encourage welfare recipients to work. Furthermore, SSP led to no net increase in government costs. Because of SSP’s large positive impacts on employment and earnings, the combination of reduced Income Assistance payments and increased tax revenues offset the cost of the SSP supplement payments.