Assisting the Transition from Workfare to Work: A Randomized Experiment

Abstract: Randomly sampled workfare participants in a welfare-dependent region of Argentina were given a voucher that entitled an employer to a sizable wage subsidy. A second sample also received the option of skill training while a third formed the control group. Double-difference and instrumental-variables methods are used to deal with potential experimental biases, including selective compliance with the randomized assignment. Compared to the control group, voucher recipients had a significantly higher probability of employment, though their current incomes were no higher. The impact was largely confined to women and younger workers. Training had no impact. Labor supply effects appear to have been important. The experiment was cost effective, given low voucher take-up by employers