The relative effectiveness of welfare programs, earnings subsidies, and child care subsidies as work incentives for single mothers Public Deposited

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  • March 22, 2019
  • Rusev, Emil
    • Affiliation: College of Arts and Sciences, Department of Economics
  • Welfare programs, earnings subsidies, and child care subsidies provide incentives for single parents to escape poverty through employment. Each of these policies has been studied in the economics literature, but little is known about how well they perform relative to each other. In this dissertation I consider the impact of tax and transfer programs on welfare take-up, paid child care usage, and hours of work for single mothers. I estimate a structural model of labor supply and multiple program participation by Simulated Maximum Likelihood, utilizing data from the Survey of Income and Program Participation. I use the estimates to simulate the impact of several alternative policy reforms, such as changes in the Earned Income Tax Credit (EITC) program parameters, as well as provision of child care and wage subsidies. I find that targeted wage subsidies are the most cost-effective method of encouraging work among single mothers. While not as effective as wage subsidies, the EITC and child care subsidies also induce work and reduce poverty. Additionally, I apply the recently proposed consistent Transformed Simulated Frequency (TSF) estimator by Lee and Song (2006) and compare the results with those from the more traditional smoothed SMLE (Lerman and Manski 1981).
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  • Klaauw, Wilbert van der
Degree granting institution
  • University of North Carolina at Chapel Hill
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