Volume 29, Number 1 (Winter) 1994
Bell, Stephen H., and Larry L. Orr. 1994. "Is Subsidized Employment
Cost Effective for Welfare Recipients?
Experimental Evidence from Seven State Demonstrations." Journal of Human
Resources 29(1):42-61.
This paper examines the benefits and costs of training and subsidized employment provided to welfare recipients in demonstration programs in seven states. A classical experimental design is used to estimate the effect of these demonstrations on earnings and welfare benefits over 33 months following program entry. Both effects are substantial and, in some cases, long-lived. When combined with data on program costs, these findings indicate that, while not always cost effective for taxpayers, subsidized employment for welfare recipients does convey positive net benefits to participants and to society as a whole.
The authors are Senior Economists at Abt Associates Inc. They were assisted in the preparation of this article by many Abt colleagues (most notably William Martin and Mark Doms), various conference participants, and two anonymous referees. The data used in this article can be obtained beginning in August 1994 through August 1997 from the authors at the following address: Abt Associates Inc. 4800 Montgomery Lane, Bethesda, MD 20814. Research funding was provided by the U.S. Department of Health and Human Services, the Health Care Financing Administration. All statements, opinions, and errors are those of the authors alone.
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