Would Financial Incentives for Leaving Welfare Lead Some People to Stay on Welfare Longer? An Experimental Evaluation of 'Entry Effects' in the SSP

The Self-Sufficiency Project (SSP) is a large scale social experiment being conducted in Canada to evaluate the effects of an earnings supplement (or subsidy) for long-term welfare recipients who find a full-time job and leave income assistance. The supplement is available to single parents who have received income assistance for a year or more, and typically doubles the gross take-home pay of recipients. A critical issue in the evaluation of SSP is whether the availability of the supplement would lead some new income assistance recipients to prolong their stay on welfare in order to gain eligibility. A separate experiment was conducted to measure the magnitude of this effect. One half of a group of new applicants was informed that they would be eligible to receive SSP if they stayed on income assistance for a year; the other half was randomly assigned to a control group. Our analysis indicates a very modest exit