Essays in Labor Economics

Abstract

Issues pertaining to low income workers are of the upmost interest to policy makers. In the mid 1990s, the issue of welfare recipients and work was at the forefront of public policy, as the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 was passed. One of the many goals of the policy was to "end the dependence of needy families on government benefits" by encouraging work and ultimately higher wages. The first paper of my dissertation explores the processes by which work leads to wage growth for welfare recipients. I find that welfare recipients have similar returns to tenure and experience as non-recipients and that tenure has higher returns than experience for these women. Because of this, policies that discourage leaving work, like a work requirement, are more effective encouraging wage growth than policies discouraging welfare use, like a time-limit. A decade later, the low savings rates of low income workers has led policy makers within the Obama administration to consider making Individual Retirement Accounts (IRAs) available to all workers. The second paper of this dissertation examines how likely low individual workers are to participate in these plans. We find that low-income workers not currently offered voluntary retirement savings plans are less likely to participate than those currently offered those plans. The paper indicates policy makers should be wary of basing estimates of participation in the offered IRAs on current participation, as this may overestimate the participation rate by up to 25 percent.