When financial work incentives pay for themselves: evidence from a randomized social experiment for welfare recipients

This paper summarizes early findings from a social experiment that provided financial incentives for new welfare recipients to leave welfare and work full time. The financial incentive was essentially a negative income tax with a requirement that people work at least 30 h/week. Early results show that the financial incentive increased full-time employment, earnings, and income, and reduced poverty. Furthermore, at the end of the period discussed in this paper, the program was paying for itself through increased tax revenues. (C) 2004 Published by Elsevier B.V.