Heterogeneous treatment and self-selection in a wage subsidy experiment

Auteur(s): Brouillette, Dany; Lacroix, Guy
Résumé: The Self-Sufficiency Project (SSP) is a research and demonstration project that offered a generous time-limited income supplement to randomly selected welfare applicants under two conditions. The first, the eligibility condition, required that they remain on welfare for at least 12 months. The second, the qualification condition, required that they find a full-time job within 12 months after establishing eligibility. In this paper we focus on a neglected and important feature of the program, namely that the financial reward for becoming qualified is inversely related to the expected wage rate. Under very simple assumptions we show that those who have a low expected wage rate have a clear incentive to establish eligibility. Empirical non-parametric evidence strongly suggests that individuals self-select into eligibility. We jointly estimate a participation equation and a wage equation that are correlated through individual random effects. Our results show that the omission of self-selectivity into qualification translates into slightly underestimated treatment effects.
Type de document: Article de recherche
Date de publication: 1 août 2010
Date de la mise en libre accès: Accès restreint
Version du document: VoR
Lien permanent: http://hdl.handle.net/20.500.11794/442
Ce document a été publié dans: Journal of public economics , Vol. 94 (7-8), 479–492 (2010)
https://doi.org/10.1016/j.jpubeco.2010.02.006
Elsevier Science
Autre version disponible: 10.1016/j.jpubeco.2010.02.006
Collection :Articles publiés dans des revues avec comité de lecture

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