Association for Public Policy Analysis & Management

Recent behavioral literature on the effects of poverty on executive skills has emphasized what is termed the “bandwidth” problem:  Scarcity diminishes individuals’ cognitive capacity (or bandwidth) to focus attention beyond the needs of the day and on pursuing opportunities for improved well-being. Scarcity involves both time and money, and low-income participants’ experience of scarcity might affect how they respond to programs designed to improve their economic mobility.

One implication of this perspective is that household composition may matter, because it may affect time and money scarcity. This is especially relevant in considering the potential effectiveness of workforce programs for low-income families that include financial incentives, which can help reduce money scarcity. This paper thus argues that evaluations of workforce programs should consider analyzing the effects of the interventions on participants who are single parents with no other adults in the household (including no adult children) separately from the effects on participants who share childrearing responsibilities with other adults or who do not have children living with them. It is hypothesized that, compared with other low-income participants, those who are lone single parents, who lack the support of other adults in the household, may benefit more from a supportive workforce intervention, particularly if it includes financial incentives that help reduce money scarcity.    

 This paper uses data from the Work Rewards Demonstration (WRD), targeted toward Housing Choice Voucher recipients in New York City, to explore how the impacts of alternative workforce interventions on labor market outcomes vary according to participants’ household circumstances. In two parallel randomized trials, program applicants were allocated to intervention groups that received either employment-related services only, a combination of services plus financial incentives, or incentives only – or to a no-service/incentives control group. Effects (some large) were detected for participants who were jobless at random assignment, particularly for those offered the incentive-plus-services intervention. Effects were largest and most consistent across interventions (including the incentives-only intervention) for those jobless participants who were lone single parents—i.e., not living with other adults (including adult children).

Looking beyond average impacts, the paper compares the distribution of earnings between baseline and the fourth-year outcomes. It shows that despite the ambition signaled by participants’ decision to enroll in a workforce program, many failed to achieve an increase in earnings, a finding that highlights the need to try bolder strategies. 

The paper also compares effects of the WRD interventions on single parents with the effects of six other social experiments for the same subgroup. Drawing together various pieces of evidence, it proposes a theory for why this “subgroup effect” occurs, and why the employment effect of incentives offered in the WRD differs from that observed in other incentives experiments. It argues that the results, while tentative, have important implications for the design of next-generation experiments with incentives, suggesting the need to be more sensitive to household circumstances and the cognitive consequences of poverty.