Are Two Carrots Better Than One? The Effects of Adding Employment Services to Financial Incentive Programs for Welfare Recipients

The Self-Sufficiency Project (SSP) was a social experiment conducted in two provinces in Canada during the 1990s that tested a generous financial incentive program for welfare recipients. A little-known subsidiary experiment, called SSP Plus, had a three-way design that tested the incremental effect of adding employment services to the generous financial incentive program. Employment services are viewed by many welfare analysts as an important component of an overall strategy for helping welfare recipients escape poverty and achieve stable employment. This paper presents the results of the SSP Plus experiment. Adding employment services encouraged more people to take up the earnings supplement, and it appeared to have long-term effects on full-time employment and welfare receipt. This might be because the services improved the jobs people obtained. Both earnings and wage rates were higher compared to earnings and wages without the services and the jobs held appeared to be more sustainable.