TY  - RPRT
        AU  - Hansen, Jörgen
AU  - Lofstrom, Magnus
AU  - Zhang, Xuelin
        TI  - State Dependence in Canadian Welfare Participation
        PY  - 2006/Aug/
        PB  - Institute of Labor Economics (IZA)
        CY  - Bonn
        T2  - IZA Discussion Paper
        IS  - 2266
        UR  - https://www.iza.org/publications/dp2266
        AB  - This paper analyzes transitions into and out-of Social Assistance in Canada. We estimate a dynamic Probit model, controlling for endogenous initial conditions and unobserved heterogeneity, using longitudinal data extracted from the Survey of Labour and Income Dynamics (SLID) for the years 1993-2000. The data indicates that there are substantial provincial differences in social assistance participation. The empirical results indicate that a “welfare trap” does exist in Canada, but the extent of it varies across provinces. The results also suggest that there is a link between provincial variations in structural and spurious state dependence and regional differences in welfare generosity. In particular, the existence of structural state dependence, or a “welfare trap”, appears to be more likely in provinces with relatively high benefit levels. One implication of this result is that a change in the welfare benefit structure is not likely to lower participation as significantly among less generous provinces as more generous ones.
        KW  - welfare
KW  - state dependence
KW  - unobserved heterogeneity
KW  - initial conditions
KW  - transition
KW  - Canada
        ER  -