​The Impact Of The Workfare Income Supplement Scheme on Individuals’ Labour Outcomes

The Workfare Income Supplement (WIS) scheme has been a feature of Singapore’s social safety net since 2007. This study examines how WIS has influenced the labour outcomes of less- educated Singaporeans.

Using a difference-in-differences estimation strategy, we find that WIS was effective in incentivising less-educated Singaporeans, particularly those in the older age groups, to enter and stay in the workforce. For WIS-eligible Singaporeans who were already in the workforce, there was no evidence that WIS resulted in a change in the number of months worked for most age groups, suggesting that the negative income effect of WIS on labour supply was offset by the positive substitution effect.

While the gross wages (i.e., wages excluding WIS payout) of workers in all age groups increased, we find that WIS-eligible workers recorded a slower rate of increase in gross wages compared to those not eligible for WIS. This could be due to WIS-eligible workers working fewer hours (even though they were working the same number of months), or the sharing of the WIS subsidy between workers and employers as predicted by economic theory.

The views expressed in this paper are solely those of the authors and do not necessarily reflect those of the Ministry of Trade and Industry or the Government of Singapore.

Please click here for the full article.