Three essays in public economics

This first chapter examines the effects of mothers' welfare and work decisions on their children's attainments using a random effect instrumental variables (REIV) estimator. The estimator employs sibling comparisons and an instrumental variables approach to address the unobserved heterogeneity that may influence mothers' work and welfare decisions. The estimates imply that, relative to no welfare participation, participating in welfare for one to three years provides up to a 5 percentage point gain in a child's Picture Individual Achievement Test (PIAT) scores. A mother's number of years of work contributes between ;The second chapter develops a dynamic structural model of single mothers' work and welfare participation decisions while their children are young. This model is used to measure the effects of mothers' decisions on short run attainments of the children of NLSY 79. Using PIAT Math test scores as a measure of attainment, we find that both single mothers' work and welfare use in the first five years of their children's lives have a positive effect on children's outcomes, but this effect declines with initial ability. Furthermore, we find that the work requirement reduces a single mother's use of welfare.;The last chapter investigates the role of the 1993 EITC expansion on the decline of welfare caseloads. The joint probability of the work and welfare use decisions is estimated by a bivariate probit model. Using monthly information front the Study of Income and Program Participation, I find that the 1993 EITC expansion has at least the same effect on reducing welfare use as the welfare reform initiatives, in particular, welfare time limits. Moreover, the elasticity estimates indicate that single mothers, especially those who were not employed and dependent solely on welfare before the expansion, were more responsive to the EITC expansion than to welfare time limits. Finally, the increase in work among welfare participants is due to the relative ineffectiveness of the policies in reducing the net population of those who are on welfare and work simultaneously.