Welfare

Welfare Recipients Paid to Find Work

A welfare experiment in Canada that offers recipients financial incentives to find jobs is having promising results, according to a preliminary analysis by economists David Card of Princeton University and Philip K. Robins of the University of Miami.

  • Starting in 1992, half of 6,000 long-term welfare recipients participating in the research project were offered a biweekly subsidy if they found and kept a full-time job.

  • The subsidy is equal to half the difference between their weekly wage and the target wage level -- about $30,000 (U.S.) in British Columbia and $25,000 in New Brunswick.

  • Payments were linked to the recipients' wages only -- not household income.

  • Participants were given a year to find work and were told the subsidy would end after three years.

Card and Robins found that after 18 months close to 25 percent of those eligible for wage subsidies had found full-time work, compared with just 10 percent of those who weren't offered the subsidies.

The research project is still going on, and no one yet knows how workers will fare once subsidies end -- especially since many took low-wage jobs.

Source: Economic Trends, "Ending Welfare with a Carrot," Business Week, December 23, 1996.

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