Dynamics of Permanent Exit from Welfare in Ontario, Canada: Duration Dependence and Heterogeneity

Abstract

Monthly administrative data on welfare recipients in Ontario, Canada, are used to examine the propensity to leave welfare permanently with time spent on welfare. Nonparametric hazard models with parametric and nonparametric frailty assumptions are used to control for the effects of individual, family, community, and labour market factors as well as for unobserved population heterogeneity. The pattern of declining hazards with time, which is consistent with the duration dependency hypothesis, is most prominent among single childless men but less clearly evident among single mothers and single childless women. Policy implications are discussed.