Self-Sufficiency Project — Canada
Social Research and Demonstration Corporation (SRDC) · British Columbia and New Brunswick, Canada · 1992
Summary
The Self-Sufficiency Project is one of the most rigorous tests of whether financial incentives alone can permanently alter employment behavior. The answer was clear and sobering: they can change behavior while the incentive is in place, but the change largely reverses when the incentive ends. During the supplement period, SSP participants worked substantially more and relied less on welfare — a genuine policy success by conventional measures. But five years out, two years after the supplement ended, the treatment and control groups had converged. Participants had not acquired new skills, credentials, or employer relationships during the supplement period that would sustain employment afterward. The contrast with skills-based programs like Year Up — which also change employment rates but produce lasting effects — suggests that what matters for durable self-sufficiency is not just the financial incentive to work, but the acquisition of specific human capital that raises the returns to working.
Research question
"Does a time-limited financial supplement — available only to long-term welfare recipients who find full-time work within one year — increase employment and reduce welfare dependency permanently?"
Methodology
Intervention
Single parents who had been on welfare for at least one year randomly offered the Self-Sufficiency Project supplement: if they found full-time work (30+ hours/week) within 12 months and left welfare, they received monthly earnings supplement for up to 3 years (approximately doubling take-home pay). After 3 years, supplement ended permanently.
Assignment
Randomized controlled trial; ~9,000 single parents in British Columbia and New Brunswick
Sample size
9,000 single parents on Income Assistance (4,500 treatment, 4,500 control)
Primary outcome
Employment rate; welfare receipt; earnings; self-sufficiency at 2-year and 5-year follow-up
Effect estimate
During supplement period (year 1–3): employment +14 pp; welfare exit substantially higher; earnings higher. At 5-year follow-up (2 years after supplement ended): employment difference shrank to +2 pp (statistically insignificant); welfare receipt converged to control levels; permanent self-sufficiency not achieved for majority of participants
Decision
Findings shaped debate on welfare-to-work design; SSP provided empirical grounding for concerns that time-limited incentives produce temporary rather than lasting employment; contrasted with Year Up and other training programs that show durable effects; Canadian government used findings in evaluating design of National Child Benefit; debate about fade-out continues in earned income tax credit literature
Result
Mixed
During supplement period (year 1–3): employment +14 pp; welfare exit substantially higher; earnings higher. At 5-year follow-up (2 years after supplement ended): employment difference shrank to +2 pp (statistically insignificant); welfare receipt converged to control levels; permanent self-sufficiency not achieved for majority of participants
Evidence strength
Strong
Randomized controlled trial with large sample.
Replication status
Open for replication
Institution
Social Research and Demonstration Corporation (SRDC)
Location
British Columbia and New Brunswick, Canada
Year
1992
Policy area
Benefits Enrollment
Mechanism
Price signal