Assisting the Transition from Workfare to Work: A Randomized Experiment

Abstract

Argentina's Proempleo Experiment, conducted in 1998-2000, was designed to assess whether a wage subsidy and specialized training could assist the transition from workfare to regular work. Randomly sampled workfare participants in a welfare-dependent urban area were given a voucher that entitled an employer to a sizable wage subsidy; a second sample also received the option of skill training; and a third sample formed the control group. Voucher recipients, the authors find, had a higher probability of employment than did the control group, even though the rate of actual take-up of vouchers by the hiring employers was very low. The employment gains were in the informal sector and largely confined to female workers, younger workers, and more educated workers. Skill training had no statistically significant impact overall, though once the analysis corrects for selective compliance, an impact for those with sufficient prior education is found.

Keywords: Workfare, welfare, transition from workfare to work, Argentina, Proempleo Experiment

JEL Classification: I38, J20