Assisting the Transition from Workfare to Work: A Randomized Experiment in Argentina

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 sample formed the control group. Double-difference and instrumental- variables methods were 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. Labor supply effects appear to have been important. Training had no significant impact. The experiment was cost effective, given that take-up of the subsidy by employers was low.

Galasso, Ravaillion and Salvia (2001)Urban.RCT.Skill training and/or vouchers for workfare participants to give to prospective employers (18 month wage subsidy).Voucher reduced probability of unemployment (despite fact that few firms made use of the voucher). Private sector employment was 15% for voucher recipients compared to 9% for controls. Women and younger workers had largest impacts. beneficiaries of temporary employment programs.