The Limits to Wage Growth: Measuring the Growth Rate of Wages for Recent Welfare Leavers

48 Pages Posted: 26 Aug 2001 Last revised: 23 Oct 2010

See all articles by David Card

David Card

University of California, Berkeley - Department of Economics; Institute for the Study of Labor (IZA); National Bureau of Economic Research (NBER)

Charles Michalopoulos

MDRC - Welfare Reform

Philip K. Robins

University of Miami - School of Business Administration - Department of Economics

Date Written: August 2001

Abstract

We study the rate of wage growth among welfare leavers in the Self Sufficiency Program (SSP), an experimental earnings subsidy offered to long-term welfare recipients in Canada. Single parents who started working in response to the SSP incentive are younger, less educated, and have more young children than those who would have been working regardless of the program. They also earn relatively low wages in their first few months of work: typically within $1 of the minimum wage. Despite these differences, their rate of wage growth is similar to other welfare leavers. We estimate that people who were induced to work by SSP experienced real wage growth of about 2.5 - 3 percent per year - a rate consistent with conventional measures of the return to experience for similar workers.

Suggested Citation

Card, David E. and Michalopoulos, Charles and Robins, Philip K., The Limits to Wage Growth: Measuring the Growth Rate of Wages for Recent Welfare Leavers (August 2001). NBER Working Paper No. w8444, Available at SSRN: https://ssrn.com/abstract=281075

David E. Card (Contact Author)

University of California, Berkeley - Department of Economics ( email )

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Charles Michalopoulos

MDRC - Welfare Reform ( email )

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Philip K. Robins

University of Miami - School of Business Administration - Department of Economics ( email )

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