Three Essays in Applied Microeconomics

Abstract

This dissertation contains three chapters. The first chapter, entitled "Households' Financial Resources during Periods of Income Shortfall Caused by Childbirth," examines the use of unsecured debt, savings, and government assistance as potential resources in the case of a reduction in total income caused by childbirth. The results show that a decrease in total family income leads to a statistically significant but small reduction in consumption. Depending on income before childbirth, households use government assistance programs, especially Food Stamps benefits, and/or their savings, when income decreases due to childbirth. Households do not use unsecured debt.

The second chapter, entitled "The Effect of Paid Maternity Leave on Participation in Government Assistance Programs," examines how paid and unpaid maternity leave affects participation in government assistance programs. This research uses state-mandated Temporary Disability Insurance as a measure of paid maternity leave to estimate whether access to paid leave before and after childbirth causes a decrease in reliance on government assistance programs. The results show that families with access to Temporary Disability Insurance are less likely to rely on public assistance when they have a newborn. The probabilities of participation in Food Stamps and Temporary Assistance for Needy Families are lower for families who reside in states that mandate TDI compared with families who reside in states without mandated TDI. There is no statistically significant difference for WIC.

The third chapter, entitled "The Effect of Behavior Problems on Unsecured Debt Use," examines the effect of behavior problems on credit card debt and student debt among young adults. The results show that behavior problems, in general, do not predict credit card ownership, intensive credit card use, student loans, and high level of indebtedness. Internalizing behavior problems are associated with a lower probability of having carryover balances and a drop in unsecured debt. Behavior problems are linked to a decrease in the probability of having student loans and a drop in the student loan balance. The results also show that when families have unsecured debt, the likelihood that their children as young adults use credit cards and the balance on these credit cards are higher.