Is Subsidized Employment Cost Effective for Welfare Recipients? Experimental Evidence from Seven State Demonstrations

This paper examines the benefits and costs of training and subsidized employment provided to welfare recipients in demonstration programs in seven states. A classical experimental design is used to estimate the effect of these demonstrations on earnings and welfare benefits over 33 months following program entry. Both effects are substantial and, in some cases, long-lived. When combined with data on program costs, these findings indicate that, while not always cost effective for taxpayers, subsidized employment for welfare recipients does convey positive net benefits to participants and to society as a whole.