Building a Body of Knowledge
The “Make Work Pay” Experiments: Using Earning Supplements to Reward Work
“A wonderful set of studies…have shown that an intervention to give earnings supplements to families, in exchange for getting the household heads and partners in the family to work steadily, has a positive effect, not only on family well-being and marriage stability, but even on how the kids did in school….”
— Cynthia M. Duncan, author of Words Apart: Why Poverty Persists in Rural America, “FRONTLINE,” PBS
Beginning in the 1990s, MDRC’s “Make Work Pay” experiments tested whether offering earnings supplements would increase employment and income and improve family well-being among welfare recipients. The experiments responded to a fundamental challenge: Low-wage jobs often leave families only barely better off financially than even subsistence-level welfare benefits. As a result, requiring welfare recipients to work, even if it succeeds in increasing employment and reducing welfare receipt, still may not increase income. Earnings supplements sought a way out of this conundrum by augmenting the earnings of individuals working in low-wage jobs. Supplements have been incorporated into welfare policies in more than 40 states.
MDRC has conducted a series of random assignment studies of different earnings supplementation strategies in the US and Canada. The studies have examined the cost of various approaches, as well as their effects on work, welfare receipt, and the well-being of families and children. The results have been promising: The programs increased employment, earnings, and income among parents. The parents’ employment and income gains produced, in turn, modest but important benefits for young children; children did better on a range of school measures — based on standardized test scores, teacher ratings, and parent reports — than children in the control group whose parents were not eligible for earnings supplements.
Taken together, these studies, combined with research on the Earned Income Tax Credit and other work-conditioned supplements, have created a robust literature on the value of these interventions. Supplements have been incorporated into welfare policies in more than 40 states, and MDRC’s work on financial incentives continues in studies of conditional cash transfers and performance-based scholarships.
