When financial work incentives pay for themselves: evidence from a randomized social experiment for welfare recipients

This paper summarizes early findings from a social experiment that provided financial incentives for new welfare recipients to leave welfare and work full time. The financial incentive was essentially a negative income tax with a requirement that people work at least 30 h/week. Early results show th...

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Bibliographic Details
Published in:Journal of public economics 2005, Vol.89 (1), p.5-29
Main Authors: Michalopoulos, Charles, Robins, Philip K., Card, David
Format: Article
Language:English
Subjects:
Financial incentives
Labor supply
Social experimentation
Welfare reform
Welfare-to-work programs
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Summary:This paper summarizes early findings from a social experiment that provided financial incentives for new welfare recipients to leave welfare and work full time. The financial incentive was essentially a negative income tax with a requirement that people work at least 30 h/week. Early results show that the financial incentive increased full-time employment, earnings, and income, and reduced poverty. Furthermore, at the end of the period discussed in this paper, the program was paying for itself through increased tax revenues.
ISSN:0047-2727
1879-2316
DOI:10.1016/j.jpubeco.2002.02.001