The Effects of Welfare Programs on Experimental Responses.

TLDR: The authors examined the problems of generalizing from such an experimental setting to the national labor-supply responses that would be generated by a negative income tax that replaced existing welfare programs for families headed by able-bodied males.

Abstract: The Graduated Work Incentive Experiment took place in two states, New Jersey and Pennsylvania, in which able-bodied males were eligible for relatively generous welfare programs. The major purpose of this paper is to examine the problems of generalizing from such an experimental setting to the national labor-supply responses that would be generated by a negative income tax that replaced existing welfare programs for families headed by able-bodied males. A second question, closely related but theoretically and empirically more tractable, concerns what the labor-supply effects of the experimental plans would have been had there been no welfare program in New Jersey and Pennsylvania for families headed by able-bodied males. Primarily to shed light on the first question, this paper discusses the second question in some detail.1 In the experiment, families were assigned on a stratified random basis to either one of eight experimental groups or to a control group. Families assigned to the control group were not entitled to benefits from any of the experimental negative income tax plans. Each of the eight experimental groups were eligible for benefits from a different negative income tax program for a period of three