ALBERTA WELFARE REFORM AND EMPLOYMENT OUTCOMES OF WELFARE RECIPIENTS AND SINGLE-MOTHERS

Abstract

Though the economic literature generally agrees on the positive labour supply effects of welfare reforms in the 1990s; there have been few studies that evaluate how these reforms might have affected employment outcomes of former and potential welfare recipients. This study fills this gap by using the 1993 Alberta welfare reform as a natural experiment. The 1993 and 1994 data from Survey of Labour and Income Dynamics show that welfare recipients and single mothers in Alberta were more likely to participate in the labour force and worked full-time for employers with multiple offices across Canada. Moreover, single mothers received lower wage rates if their employment started after the reform. After controlling for individual heterogeneity; however, single mothers were found to receive higher wage rates and less likely to work full-time. These findings suggest unobservable characteristics are also significant in determining employment outcomes of those affected by welfare reforms.