Social Assistance and Labour Supply
Canadian Journal of Economics, Vol. 33, Issue 3, August 2000
Posted: 28 Sep 2001
The longitudinal, 1988-89 LMAS makes it possible to study the interaction between social assistance and labor supply while allowing for substantial time dependence. Tobit equations for hours worked on and off social assistance, which allow for endogenous selection of social assistance status, are estimated by using FIML. Small, but statistically significant, effects for a social assistance benefit variable are obtained, particularly for females. A claw-back variable is not consistently useful. The wage rate has a consistently negative coefficient in the selection equations and is important in the Tobit equations. In this paper an attempt is made to reconcile results found in earlier literature.
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