Social assistance and labour supply

The longitudinal, 1988-89 LMAS makes it possible to study the interaction b etween social assistance and labour supply while allowing for substantial t ime dependence. Tobit equations for hours worked on and off social assistan ce, which allow for endogenous selection of social assistance status, are e stimated by using FIML. Small, but statistically significant, effects for a social assistance benefit variable are obtained, particularly for females. A claw-back variable is not consistently useful. The wage rate has a consi stently negative coefficient in the selection equations and is important in the Tobit equations. In this pager an attempt is made to reconcile results found in earlier literature. JEL Classification: I38, J22.