The Effects of Subsidized and Transitional Employment Programs on Noneconomic Well-Being

Abstract

Programs designed to help disadvantaged workers improve their labor-market prospects may have effects beyond improvements in employment rates and income. One possible supplementary effect is improvements in subjective well-being, or how participants feel about their current life situations. Subjective well-being is important because there are social costs related to lower levels of well-being, and because a person’s outlook has been demonstrated to have an effect on his or her future behavior.

The analysis reported here uses data collected as part of the Subsidized and Transitional Employment Demonstration (STED), which is designed to investigate the effects of subsidized and transitional employment programs on both financial and nonfinancial well-being. The STED programs examined here had positive effects on both employment and well-being while the programs were operating, but these effects dissipated. The analysis reported here examines two main research questions:

-- What were the programs’ effects on well-being and how did the effects vary over time?

-- What are the mechanisms for these effects? Were the effects primarily due to participation in employment or did other factors contribute?

The STED data-collection effort included multiple approaches to the measurement of well-being, including a global measure of “happiness” (or overall life satisfaction) and several more specific concepts such as emotional distress, “locus of control,” and self-esteem. The interrelationships among the multiple measures were examined. Generally, individuals with less positive scores on the specific measures also had less positive overall assessments of their well-being, so the analysis focused on the overall measure.

The analysis of STED’s effects on well-being began by examining the variation in well-being associated with participants’ social and demographic characteristics, and comparing the trends in that population with well-being trends among Americans in general. Members of the STED sample were less likely to assess their well-being positively than the general population, and some factors associated with positive assessments in the general population (marriage, for example) had little association with positive assessments in the STED sample. However, the STED programs, which provided employment (and earnings) along with supportive services, had a positive effect on well-being. The impact model indicates that these positive effects occurred both because the programs made it more likely for program group members to be employed (or because that employment brought them increased income) and because of their participation in the program itself, independent of its effects on their employment. These results add to an emerging body of literature on changes in well-being when people move from unemployment to employment.

Keywords: employment, well-being, happiness, subsidized employment, random assignment

JEL Classification: C93, H53, I38