Year of Publication

2013

Degree Name

Doctor of Philosophy (PhD)

Document Type

Doctoral Dissertation

College

Business and Economics

Department

Economics

First Advisor

Dr. Christopher Bollinger

Second Advisor

Dr. Kenneth Troske

Abstract

This dissertation examines the effect of the Earned Income Tax Credit (EITC) on labor force participation of single mothers by controlling for child care costs. Based on a simple model of utility maximizing households that jointly determine hours worked and hours of non-maternal child care demanded, I estimate the change in the labor force participation rate of single mothers following the EITC expansions of the 1990s. In order to investigate the usage of different modes of childcare services, a multinomial logit model has been estimated. The data source for the study is topical module panels of the Survey of Income and Program Participation (SIPP) for the years 1992, 1993, 1996 and 2001. These panels were selected to reflect the time horizon during which the policy changes of the 1990s took place. The empirical estimation strategy is designed to deal with the problems of both selection bias and simultaneity in choosing hours worked and hours of non-maternal child care demanded. Due attention has been paid to the issue of identification of the empirical equations to be estimated in this paper.

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