New Reform Strategies and Welfare Participation in Canada

Abstract

Heterogeneous welfare reform policies and timing of those policies among Canadian provinces reveal new information about the roles of different policy tools in accounting for declines in welfare participation. Work requirements, diversion, earnings exemptions, and time limits—referred to as new reform strategies—appear to explain at least 16 percent of observed welfare participation declines from 1994 to 2005, more than eligibility requirements and benefit levels explain. Conservative estimates imply that welfare participation falls by 1.9 percentage points (21 percent relative to mean welfare participation) in provinces and years with stringent combinations of new reform strategies in place.