The Frisch Medal has been established by the Econometric Society to encourage the creation of good applied work and its submission to Econometrica. It is given every two years for an applied article (empirical or theoretical) published in Econometrica during the past five years.
The selection committee for 2008 (Gary Chamberlain, Chair; John Cochrane; Jean-Marc Robin) awarded the Frisch Medal of the Econometric Society to David Card and Dean R. Hyslop for their article, "Estimating the Effects of a Time-Limited Earnings Subsidy for Welfare-Leavers," Econometrica, 73(6), November 2005, 1723-1770.
RANDOMLY ASSIGNED TREATMENT is a powerful methodology for evaluation of social programs. In the early 1990s, the Canadian government funded a program to test whether a time-limited earnings subsidy could help long-term welfare recipients make a permanent break from welfare dependency. The subsidy was only available for full-time work; the participants had to begin receiving it within a year of the randomly assigned potential eligibility or lose all future eligibility. Those who achieved eligibility could move back and forth between welfare and work, receiving the subsidy whenever they were working full time. The subsidy ended three years after the recipient achieved eligibility. In “Estimating the Effects of a Time-Limited Earnings Subsidy for Welfare-Leavers," David Card and Dean Hyslop exploit the random assignment and institutional detail of the program, combined with a dynamic model of optimizing behavior, to provide a rich interpretation of the time profile of the experimental impacts. Their random-effects model provides a good fit to the behavior of the group that achieves eligibility and provides a compelling distinction between selection and treatment effects for that group. The paper is a model of careful, insightful empirical work.