Next Steps in Welfare-to-Work

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Chapter in David L. Weimer and Aidan R. Vining, Editors, Investing in the Disadvantaged: What We Know, and What We Need to Know, about the Benefits of Social Policies. Washington: Georgetown University Press, 2008.

Welfare-to-work policies seek to build human capital by encouraging and facilitating greater or more beneficial participation in labor markets. Effective policies not only increase income but also generally raise the return to additional human capital investment. What are possibly effective policies? How can we know if they would be effective? How do we know if they are desirable?

In this chapter I answer the first two questions by proposing several policy demonstrations. Each of the demonstrations is motivated to some extent by existing research. Its execution would generate information that would enable researchers to determine its effectiveness. I answer the third question by reviewing the application of cost-benefit analysis (CBA) to the Minnesota Family Investment Program, one of the most important state initiatives in the welfare policy area in terms of breadth of assessment and contribution to policy development.

I propose three demonstrations: first, an experiment with subsidized third-party provision of strategic financial advice and support for working low-income families; second, coordinated state experimentation with a transitional incentive package for recipients of Temporary Assistance for Needy Families (TANF); and third, an employment intervention for TANF applicants and recipients with substantial disabilities. There is a common theme to these proposals. Each involves changes in factors that influence both what is gained from human capital currently possessed and from additional investment in skills and reputation for targeted 2 families. For working families, the third-party advisor demonstration targets access to benefits, information, and sense of personal control. The transitional incentive package demonstration intends to rekindle state interest in active efforts to improve TANF policies that influence incentives to work. The employment intervention creates an incentive for refocusing the attention of TANF applicants and recipients with substantial disabilities on habilitation and skill development rather than benefits acquisition. All three involve uncertain benefits or costs about which a well-designed experiment should produce considerable information.

Suggested citation:
Wiseman, Michael. “Next Steps in Welfare-to-Work,” Chapter 11 in David L. Weimer and Aidan R. Vining, Editors, Investing in the Disadvantaged: Assessing the Benefits and Costs of Social Policies. Washington: Georgetown University Press, 2009, 187-204.