New Hope Project — Milwaukee Earnings Supplement
MDRC / New Hope Project · Milwaukee, WI, USA · 1994
Summary
The New Hope Project tested a central insight from welfare economics: poverty is not just about income insufficiency but about the structural barriers that trap people in low-wage, part-time work. New Hope provided a guaranteed earnings supplement to anyone willing to work full-time — creating a floor below which no working adult would fall. The employment effects were real but temporary; the child effects were more lasting. Children whose parents received New Hope benefits performed substantially better in school five years later — particularly boys, who showed lasting academic advantages. The likely mechanism: the earnings supplement and childcare subsidy together enabled parents to work more stable schedules and place children in higher-quality formal childcare settings rather than informal arrangements. The experiment is a foundational text in two debates simultaneously: whether work requirements improve adult outcomes (uncertain), and whether income supplements improve child outcomes (yes, with evidence of durability).
Research question
"Does an earnings supplement — guaranteeing income above the poverty line to anyone who works full-time — improve employment and child outcomes more than standard means-tested welfare?"
Methodology
Intervention
Adults living in poverty in two high-poverty Milwaukee neighborhoods randomly offered New Hope benefits: (1) earnings supplement bringing household income above poverty for any adult working 30+ hours per week; (2) subsidized health insurance; (3) subsidized childcare. If unable to find work, offered subsidized community service job. Program lasted 3 years.
Assignment
Randomized controlled trial; 1,357 adults randomly assigned to New Hope or control
Sample size
1,357 adults (677 treatment, 680 control) in 2 Milwaukee neighborhoods
Primary outcome
Employment rate and earnings; welfare receipt; child academic achievement and social behavior (at 2- and 5-year follow-up)
Effect estimate
Employment: +12 pp at 12 months (largest for those not working at baseline); child outcomes: treatment group children showed higher academic achievement, better social skills, more time in structured childcare; children's academic advantage persisted at 5-year follow-up, strongest for boys (+.28 SD on academic achievement); adult effects faded substantially after program ended
Decision
Study influenced welfare reform design in mid-1990s; child outcome findings cited by researchers arguing EITC expansions are undervalued relative to adult employment effects; New Hope Institute founded to disseminate lessons; MDRC used findings in designing subsequent workforce programs
Result
Mixed
Employment: +12 pp at 12 months (largest for those not working at baseline); child outcomes: treatment group children showed higher academic achievement, better social skills, more time in structured childcare; children's academic advantage persisted at 5-year follow-up, strongest for boys (+.28 SD on academic achievement); adult effects faded substantially after program ended
Evidence strength
Strong
Randomized controlled trial with large sample.
Replication status
Open for replication
Institution
MDRC / New Hope Project
Location
Milwaukee, WI, USA
Year
1994
Policy area
Benefits Enrollment
Mechanism
Cash transfer