Work Incentive Provisions in Benefit Structure of Social Assistance Program

공공부조 급여구조가 수급자의 근로동기에 미치는 효과

This paper examined the impacts of the welfare reform program, California Work Pays Demonstration Program(CWPDP), implemented in 1992. CWPDP was designed to move welfare recipients into the labor market by reducing the amount of AFDC grants and one-third earned income disregard. The evaluation of the policy impacts on the welfare recipients was conducted in two areas: employment and earnings. This study used a subset of a database created by the California Department of Social Services, and University of California Data Archive and Technical Assistance. The subset is composed of 3,936 AFDC-FG cases selected in LA County: 1,311 control cases and 2,625 experimental cases. The control group was kept on the AFDC rules as of September 1992, while the experimental group was subject to AFDC rule changes implemented under CWPDP. The analyses of the employment and earnings using the random effects probit model and the random effects regression model, respectively, indicated that CWPDP did not effectively encourage female heads to participate in the labor market. It also revealed that CWPDP did not significantly increase the earnings of female heads. The findings imply that the disincentive structure of the public assistance program is not the main barrier preventing female heads from getting jobs and leaving the welfare rolls. Rather, participation in the labor market and exit from welfare is mainly determined by their own demographic characteristics and the economic cycle. Based on the findings, policy implications are suggested on the National Minimum Protection Program in Korea. Those include a flexible exemption rate for the earned income of beneficiaries, affordable child care services, and guaranteed public jobs.