State dependence in Canadian welfare participation

Arbeitspapier

This paper analyzes transitions into and out-of Social Assistance in Canada. We estimate a dynamic Probit model, controlling for endogenous initial conditions and unobserved heterogeneity, using longitudinal data extracted from the Survey of Labour and Income Dynamics (SLID) for the years 1993-2000. The data indicates that there are substantial provincial differences in social assistance participation. The empirical results indicate that a welfare trap does exist in Canada, but the extent of it varies across provinces. The results also suggest that there is a link between provincial variations in structural and spurious state dependence and regional differences in welfare generosity. In particular, the existence of structural state dependence, or a welfare trap, appears to be more likely in provinces with relatively high benefit levels. One implication of this result is that a change in the welfare benefit structure is not likely to lower participation as significantly among less generous provinces as more generous ones.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IZA Discussion Papers ; No. 2266

Classification and Topics

• Classification: Wirtschaft ; Welfare, Well-Being, and Poverty: General ; Welfare, Well-Being, and Poverty: Government Programs; Provision and Effects of Welfare Programs ; Demographic Economics: Public Policy
• Subject: welfare ; state dependence ; unobserved heterogeneity ; initial conditions ; transition ; Canada

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Hansen, Jörgen ; Lofstrom, Magnus ; Zhang, Xuelin
• Event: Veröffentlichung
• (who): Institute for the Study of Labor (IZA)
• (where): Bonn
• (when): 2006

Further information

• Handle: http://hdl.handle.net/10419/34031
• Last update: 10.03.2025, 11:41 AM CET