When Can Experimental Evidence Mislead? A Re-Assessment of Canada's Self Sufficiency Project

Abstract

The Self-Sufficiency Project was a well-known welfare-to-work experiment that provided a generous but time-limited financial incentive to leave welfare and enter the workforce. Experimental evidence showed large short-term impacts but no lasting effects. We argue that these conclusions need to be re-assessed. Policy changes implemented during the SSP implied the behavior of the control group did not provide an appropriate counterfactual. We estimate the impacts the financial incentive would have had in a stable policy environment. This re-assessment leads to significant changes in the lessons previously reached. Our study demonstrates that experimental findings need to be interpreted with care.

Keywords: welfare-to-work policies, social experiments, Self-Sufficiency Project

JEL Classification: C90, H53, I38