Labour Market Program Efficacy: Evidence from Ontario Works

Joint with Jason Adams and Ken Chow

Abstract: The Ontario Works social assistance program assigns beneficiaries to active labour market programs (ALMPs) intended to help them find and keep employment. Using an administrative dataset from an Ontario Ministry of Community and Social Services, we examine the short-term and medium-term efficacy of different ALMPs over the 2003-2013 period. After controlling for endogenous enrollment and omitted variable bias using an instrumental variable approach, we find significant differential impacts on both spell duration and one- and two-year return rates across programs. In particular, our IV estimates find that structured job search activities and other skills enhancing ALMPs reduce spells by between 1.6 and 3.1 months, while OLS estimates would suggest that they prolong benefit spells. We find evidence that placement services increase spell length considerably, but lead to lower return rates to Ontario Works one and two years after the end of a benefit spell.  A back-of-envelope cost benefit analysis shows that ALMPs saved approximately $450 million for our population of study.



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