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What are the effects of making it possible to combine welfare with work? The existing literature suggests that this practice has strong work-incentive effects and represents a means for reducing unemployment and welfare dependency. In this paper we reassess this thesis using new US experimental data. Our findings differ from predictions based on survey data. We find that making it possible to combine welfare with work has only very limited incentive impacts on families’work effort and significantly increases the welfare caseload. Classification JEL: I 380