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| Author(s) Christopher Ferrall |
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| Title Explaining and Forecasting Results of The Self-Sufficiency Project |
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| Publication Name Review of Economic Studies |
Publication Type Journal |
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| Other Publication Information doi: 10.1093/restud/rds008 |
Publication Year 2012 |
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| Abstract This paper studies the Self-Sufficiency Project (SSP), a controlled randomized experiment concerning welfare, by estimating a model of endogenous skill accumulation, multi-dimensional job opportunities, and time-varying opportunity costs of labor market time. Methods for estimating dynamic programming models with unobserved heterogeneity are extended to account for unexpected policy interventions and endogenous sample selection and initial conditions. Parameters are identified and consistently estimated by imposing optimal responses to the exact form of the SSP earnings supplement and the experimental program, which induces exogenous variation between treatment groups and within groups as treatment progresses. The estimated model tracks primary outcomes well in and out of sample, except for under-estimating trends in the sample of new welfare applicants. Predictions from counterfactual experiments run counter to non-structural results reported elsewhere, and they suggest that details of the SSP's design are critical for interpretation of results. The separate SSP Plus treatment may have longer lasting and more generalized impacts than the in-sample impacts suggest. |
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| Keywords Dynamic Household Behaviour, Welfare Policy, Controlled Experiments, GMM |
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| Website http://restud.oxfordjournals.org/content/early/2012/02/14/restud.rds008.abstract?keytype=ref&ijkey=q4NZTNqaE54Zhcc |
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