Incentive effects of social assistance: A regression discontinuity approach Kevin Milligan ~ Vancouver School of Economics ~ University of British Columbia

Incentive effects of social assistance: A regression discontinuity approach

with Thomas Lemieux.
Journal of Econometrics, Vol. 142, No. 2 (February 2008), pp. 807-828.
Google Scholar entry.

Abstract:

Before 1989, childless social assistance recipients in Quebec under age 30 received much lower benefits than recipients over age 30. We use this sharp discontinuity in policy to estimate the effects of social assistance on various labour market outcomes using a regression discontinuity approach. We find strong evidence that more generous social assistance benefits reduce employment. The 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-differences estimators may perform poorly with inappropriately chosen control groups.

Versions:

Published version, February, 2008: DOI.

Updated draft, January, 2007: PDF.

NBER Working Paper No. 10541, June, 2004: Abstract/Paper.


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