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Author ORCID Identifier
Open Access Dissertation
Doctor of Philosophy (PhD)
Year Degree Awarded
Month Degree Awarded
Business Administration, Management, and Operations | Nonprofit Studies | Operational Research | Social Welfare
Subsidy welfare programs provide financial assistance to economically disadvantaged individuals and families to access essential and life-altering services (e.g., education, child care, and housing) that they might not otherwise have access to. Access to these services is considered critical to achieving a better and more sustainable future for all. As such, these high-quality services are directly related to several United Nations Sustainable Development Goals, which were adopted as a universal call to action to end poverty, save the planet and improve the lives and prospects of everyone, everywhere." In particular, the need for these affordable and high-quality services has been underscored during the COVID-19 pandemic to facilitate a safe and robust reopening of the economy. Inspired by this, in this dissertation, we construct, analyze, and analytically solve a spectrum of resource allocation problems involving different participants within subsidy welfare programs, including local nonprofit organizations, government agencies, private service providers, and individuals and families. The models we construct aim to help different participants make better operational decisions that enable the generation of the most effective and/or equitable social outcomes under these programs. The dissertation consists of three studies addressing these decisions.
In the first study, we consider operational challenges faced by a local nonprofit organization that administers and manages the operations of a subsidy voucher program within its service area. Specifically, motivated by a child care subsidy voucher program, we develop an analytical model that incorporates details of the subsidy voucher offer process and that captures the challenges faced by a Child Care Resource and Referral Agency (CCR&R, a local nonprofit organization) when allocating funds for its outreach and provider services activities. We analyze how a CCR&R should allocate its limited funds between these two types of activities to ensure equitable access to child care across the different regions of its service area. We show that it might be optimal for the CCR&R to invest more funds in outreach in the region with a lower proportion of income-eligible families. This is especially true when: the external considerations (e.g., public transportation and infrastructure) in that region have a greater impact on a family’s acceptance propensity; the marginal return of investment in outreach in that region is higher and abundant funds are available; the socioeconomic distress experienced by families in that region is significantly higher; or a large amount of funds is earmarked for outreach in that region. We contextualize our study for a CCR&R in Massachusetts and conclude that the proposed investment decisions can improve equity outcomes by 7.0%.
In the second study, we examine operational challenges faced by a government agency in a subsidy voucher program. Specifically, we delve deeper into another important complexity within the subsidy voucher programs by studying how a government agency should allocate funds among several local nonprofit organizations. In a typical subsidy voucher program, a government agency (say, the funding agency) provides funds to multiple local nonprofit organizations (say, the service agencies) in order to enhance the accessibility and quality of subsidized services for beneficiaries residing in their local service areas. These service agencies invest in activities within their areas to generate social impact for beneficiaries by enhancing the quantity and quality of services at local providers. The funds allocation decisions in such a program are complicated by consideration of equity in social impact generated across different areas, intricate relationships among contextual factors in social impact generation, and information asymmetry between different entities. Considering that additional funds may become available for only one area, we develop a model to analyze how the funding agency’s funds allocation decisions lead to the most overall social impact in an equitable manner. Our analysis shows how the funding agency should incorporate the within-area factors in addition to the between-area factors in its optimal allocation decisions. For instance, the funding agency should allocate more funds toward an area when it has a relatively balanced mix of subsidy-accepting and non-accepting providers, or outreach activity is more likely to yield a higher investment return and it has fewer non-accepting providers. Also, comparing the resulting outcomes under the equity-ensuring method with those under different funding methods, we find that: While an efficiency-focused method leads to a higher total social impact, it could lead to significantly high levels of inequity across the areas. Further, although a simple formula-based method could achieve greater total social impact while not severely sacrificing equity in certain situations, the equity-ensuring method always eliminates inequity while not severely sacrificing the total social impact under a wide range of values of contextual factors. Finally, using a case study based on Massachusetts’ child care subsidy program, we illustrate that the proposed optimal decisions achieve equity while enhancing overall social impact by approximately 3% versus current allocation decisions.
In the third study, we investigate operational challenges faced by a government agency in designing subsidy welfare programs and program participation decisions faced by service providers. Specifically, we help a government agency make a selection decision between two types of subsidy welfare programs--the subsidy voucher programs and the contracted slot programs. Although both programs are service-based and rely on the involvement of service providers for service delivery to the beneficiaries, they create social impact through different mechanisms. Under the subsidy voucher programs, beneficiaries have access to services from a large number of service providers (including a mix of high- and low-quality providers). Whereas, under the contracted slot programs, beneficiaries have access to services only from high-quality providers (even if at a fewer number of service providers). Since the government's goal is to deliver high levels of quantity and quality of services to the beneficiaries, which are both influenced by the service providers' participation decisions (based on their payoff-driven objectives), the government's mechanism selection decision becomes non-trivial. We develop a game-theoretical model setup to analyze how contextual factors impact the service providers' participation decisions in these two programs. Considering the interrelationship between service providers' decisions and contextual factors under each type of subsidy program, our analysis shows that providers are more willing to participate in the program when: the reimbursement rate is relatively high and the cost of managing the program is relatively low. Further, we compare the two programs in terms of the societal outcomes generated for the beneficiaries of the programs. To do so, we conduct numerical analysis using the child care context in Massachusetts and identify conditions under which the level of societal outcomes under a contracted slot program outperforms a subsidy voucher program or vice versa. For example, a contracted slot program generates higher societal outcomes than a subsidy voucher program when: there are relatively more high-quality providers, and they have a relatively high capacity; the reimbursement rate in the contracted slot program is relatively high, and the demand for the high-quality providers' services in the private market is relatively low; or low-quality providers' capacity is relatively high, and the demand for the high-quality providers' services in the private market is relatively low. However, we find that the subsidy voucher program generally outperforms the contracted slot program when we evaluate the two programs based on the societal outcomes per total reimbursement expenditure by the government.
As one of the first few research studies to consider resource allocation in subsidy welfare programs, we help nonprofit organizations, government agencies, and for-profit service providers improve their operational decisions in order to benefit the beneficiaries of the programs. The results of this dissertation are expected to offer managerial insights to the participants within the subsidy welfare programs, increase equity, efficiency, and sustainability of the programs, and benefit society at large.
Wei, Wei, "RESOURCE ALLOCATION IN SUBSIDY WELFARE PROGRAMS: MANAGERIAL INSIGHTS FOR NONPROFITS, GOVERNMENTS, AND SERVICE PROVIDERS" (2023). Doctoral Dissertations. 2918.
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