Using Experiments to Evaluate Performance Standards: What Do Welfare-to-Work Demonstrations Reveal to Welfare Reformers?

This paper examines how experimental demonstrations can be used to inform planners about the efficacy of social programs in light of a performance standard. The problem is illustrated by considering the situation faced by state governments attempting to design programs to meet the new federal welfare-to-work standards. Data from experimental evaluations alone allow only limited inferences about the labor market outcomes of welfare recipients. Combined with prior information on the selection process, however, these data are informative, suggesting either that the long-run federal requirements cannot be met or that these standards will only be met under special circumstances.