The Counseling and Training Subsidy Treatments

Abstract

The Seattle and Denver Income Maintenance Experiments were the only negative income tax experiments to test the efficacy of counseling and training subsidies in limiting the expected program-induced reductions in work effort. The program had two components: free counseling services and a program of subsidies for the direct costs of education and training. Three levels of experimental treatment were used. All experimental subjects were eligible for free counseling, and some were also eligible for an educational subsidy at the rate of 50 or 100 percent of direct costs incurred. Participation in all aspects of the program were voluntary, and it varied with the characteristics of individuals as well as the particular treatment. The training subsidies did induce increased school attendance, and both counseling and training affected labor supply. However, no subsequent effects of increased human capital have been found. Definitive statements about the final effects of the program must await analysis of additional data, but the results presented here suggest that the treatments had at most an modest impact.