Essays in labor economics: Effects of EITC on employment and education, and trends in earnings instability

This dissertation is composed of three essays. The first essay examines the program effects of Earned Income Tax Credit (EITC) on school enrollment decisions of single mothers utilizing state-time variation in the implementation of state EITC programs. To my knowledge there are no previous studies quantifying the effect of EITC on the human capital investment of low-educated adult women, and the first essay helps fill this gap. Using the October supplement of the Current Population Surveys from 1996 to 2008, I find that the probability of enrollment decreases 1.4 percentage points (about 14%) and the probability of college enrollment decreases 1.7 percentage points (about 19%) for a 10 percentage point increase in the state EITC supplement rate (or equivalently, a 10 percent increase in the federal EITC benefit). The high school degree completers are more responsive to EITC relative to high school dropouts. It appears that EITC causes some high school completers who would otherwise enroll in college full time to not enroll. There is very little adjustment from full time to part time college enrollment status.;In the second essay, following the empirical strategy developed in the first essay, I examine labor supply responses of single mothers focusing on the extensive labor supply margin. Using individual-level data from March and October Supplements of the Current Population Survey (CPS) and Survey of Income and Program Participation (SIPP) for the years 1996-2008, I replicate earlier findings that EITC increased labor supply of low educated single mothers. I find that the probability of working increases by 3.4 percentage points and labor force participation increases by 2.3 percentage points for a 10 percentage point increase in the state EITC supplement rate (or equivalently, a 10 percent increase in the federal EITC benefit).;In the third essay (co-authored with Chinhui Juhn, Kristin McCue and Jesse Thompson), we examine trends in male earnings instability in recent decades, using three panel datasets (the matched CPS, the SIPP, and the newly available Longitudinal Employment and Household Dynamics (LEHD) data). In contrast to several papers that find a recent upward trend in earnings instability using the PSID data, we find that earnings instability has been remarkably stable in the 1990s and the 2000s. We find that job changing rates remained relatively constant. Additionally, in the administrative dataset which is the LEHD, we do not find an increase in earnings instability among job stayers (workers who do not change jobs and have the same employer over two years). We also find an offsetting decrease in earnings instability among job changers due largely to declining unemployment associated with job changes.