Labour Market Matters - September 2012

September 2012: Labour Market Matters Addressing welfare and social assistance dependency The Canadian Labour Market and Skills Researcher Network (CLSRN) is pleased to present the September 2012 Edition of Labour Market Matters. This month’s issue examines different approaches to addressing welfare and social assistance dependency. It is often a struggle to balance the conflicting objectives of providing adequate support to low-income families, encouraging work and achieving low government costs in the structuring of income assistance (welfare) policies. In recent years governments in Canada and elsewhere have attempted to achieve these objectives by providing recipients with incentives to exit the welfare system. The choice between a “work-first†and “human capital development†approach to achieving self-sufficiency is an area of contention. The work-first approach – which emphasizes moving recipients into jobs quickly, even if at low initial wages – reflects the view that welfare recipients can best acquire work habits and skills at the workplace. In contrast, the human capital approach seeks to raise the long term earnings capacity of welfare recipients by providing training and educational opportunities. A paper by CLSRN affiliates Chris Riddell (Cornell University) and Craig Riddell (University of British Columbia) entitled “The pitfalls of work requirements in welfare-to-work policies: Experimental evidence on human capital accumulation in the Self-Sufficiency Project†(CLSRN Working Paper no. 97) investigates whether policies that encourage recipients to exit welfare for full-time employment influence participation in educational activity. They find that policies that encourage full-time employment have potentially adverse consequences for the long-term earnings capacity of single parents on welfare. The concept of “making work pay†, or getting people into the workforce with income-supplementation, has become more prevalent in recent years as governments have begun to shift away from training programs – which have been found to have limited success in helping disadvantaged groups integrate into the labour market. Governments have shifted towards programs that directly address the relative (un)attractiveness of work by directly subsidizing wages rates – to make it worthwhile for individuals to take a job they may not have otherwise taken due to the relative unattractiveness of the wages they would have received. A paper entitled “Assessing the Impact of a Wage Subsidy for Single Parents on Social Assistance†(CLSRN working Paper no. 26) by CLSRN affiliate Guy Lacroix (Université Laval) examines the success of income-supplementation programs on the integration of individuals into the Labour Market. We hope you enjoy this month’s issue of Labour Market Matters and forward it on to others who may be interested in learning more about the labour market. All releases of Labour Market Matters will be posted on the CLSRN Website at: http://www.clsrn.econ.ubc.ca. For further inquiries about Labour Market Matters or the CLSRN, please visit the website, or contact Vivian Tran at: vivian.tran@ubc.ca Craig Riddell Vivian Tran Academic Director Knowledge Transfer Officer CLSRN CLSRN Craig.Riddell@ubc.ca Vivian.Tran@ubc.ca September 2012