Understanding the Effects of Work-Based Welfare Policies on Child Human Capital
5 June, 2019 13:00 hrs
Abstract
In Milwaukee, Wisconsin (1994-1997), a work-based, anti-poverty intervention, “New Hope,” randomly assigned an income subsidy—similar to the EITC—and a child care subsidy subject to a full-time work requirement to a group of economically disadvantaged families. Randomly chosen applicants had access to these benefits for three years. The experimental evaluation found positive effects of the program on labor supply, income, and child care use. Furthermore, while parents were eligible, the program also boosted various measures of child academic achievement. However, since policies were given in a single package, little is known about the mechanisms by which New Hope affected child outcomes. This paper disentangles the mechanisms that explain the impact of New Hope on the human capital of children who were young while their families were under New Hope. To this end, I estimate a dynamic-discrete choice model of the household and child human capital. Counterfactual experiments indicate that the bulk of the impact of New Hope on child human capital is explained by the child care subsidy component of the New Hope package: the impact of the child care subsidy on child human capital is 97% bigger than that of the income subsidy. If New Hope had not included a full-time work requirement, the effect of the program on child human capital would have been almost 40% bigger.
Location:
Sala de Consejo, Beauchef 851, piso 4 - Departamento de Ingeniería Industrial, U. de Chile.
Speaker:
Jorge Rodríguez
MIPP Chile 2024