Working Paper: NBER ID: w10968
Authors: Kevin Milligan; Mark Stabile
Abstract: In 1998, the Canadian government introduced a new child tax credit. The innovation in the program was its integration with social assistance (welfare). Some provinces agreed to subtract the new federally-paid benefits from provincially-paid social assistance, partially lowering the welfare wall. Three provinces did not integrate benefits, providing a quasi-experimental framework for estimation. We find large changes in social assistance take-up and employment in provinces that provided the labour market incentives to do so. In our sample, the integration of benefits can account for around one third of the total decline in social assistance receipt between 1997 and 2000.
Keywords: child tax credits; welfare; labor market participation; social assistance; Canada
JEL Codes: H24; I38
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Integration of child benefits with social assistance (I38) | Decrease in social assistance take-up (H53) |
| Integration of child benefits with social assistance (I38) | Increase in employment among single mothers (J12) |
| $1,000 in benefits deducted from social assistance payments (H53) | Decrease in social assistance take-up (H53) |
| $1,000 in benefits deducted from social assistance payments (H53) | Increase in employment likelihood (J68) |
| Integration of child benefits with social assistance (I38) | Labor market effect (J29) |