Tightening a Welfare System: The Effects of Benefit Denial on Future Welfare Receipt

36 Pages Posted: 13 May 2002

See all articles by David A. Green

David A. Green

University of British Columbia (UBC) - Department of Economics

William P. Warburton

Government of Canada - Ministry of Human Resources

Date Written: August 2001

Abstract

We derive Local Average Treatment Effect estimates of the impact of welfare benefit denial on future receipt using a unique experiment involving reassessment of some applicants who were originally slated to receive benefits. We find evidence of considerable heterogeneity among applicants. Our results support a model with a peripheral group who exhibit scarring effects from being granted benefits and a core group who do not. The core group moves quickly back onto welfare when they are denied benefits. Even for the peripheral group, benefit denial has intermediate term but not permanent impacts.

Keywords: welfare, state dependence, local average treatment effect

JEL Classification: I38

Suggested Citation

Green, David Alan and Warburton, William P., Tightening a Welfare System: The Effects of Benefit Denial on Future Welfare Receipt (August 2001). Available at SSRN: https://ssrn.com/abstract=309755 or http://dx.doi.org/10.2139/ssrn.309755

David Alan Green (Contact Author)

University of British Columbia (UBC) - Department of Economics ( email )

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William P. Warburton

Government of Canada - Ministry of Human Resources ( email )

Victoria, British Columbia
Canada