Incentive effects of social assistance : a regression discontinuity approach
Description
abstract: "We examine the incentive effects of transfer programs using a unique policy
episode. Prior to 1989, social assistance recipients without children in Quebec who were
under age 30 received benefits 60 percent lower than recipients older than 30. We use
this sharp discontinuity in policy to estimate the effects of social assistance on
various labour market outcomes and on living arrangements using a regression
discontinuity approach. We find strong evidence that more generous social assistance
benefits reduce employment, and more suggestive evidence that they affect marital status
and living arrangements. The regression discontinuity estimates exhibit little
sensitivity to the degree of flexibility in the specification, and perform very well
when we control for unobserved heterogeneity using a first difference specification.
Finally, we show that commonly used difference-in-difference estimators may perform
poorly when control groups are inappropriately chosen"--National Bureau of
Economic Research web site.
