Two essays on youths' labor supply /

Abstract

The first chapter examines the effects of allowances received from family on youths' incentives to work, that is, on hours worked and on the probability of participating in the labor force. The empirical estimates control for unobserved heterogeneity through a number of alternative specifications, including individual fixed effects, sibling fixed effects, and individual differenced sibling fixed effects models. First, across alternative econometric specifications, the results consistently show a negative relationship between allowance and hours worked. The results of simple probit, fixed effects logit, and random effects probit models indicate that a larger allowance reduces youths' probability of participating in the labor force. Marginal effects calculations show that the labor force participation rate of youths with allowance is 11 to 24 percentage points lower than that of youths without allowance. Second, the marginal effect of an allowance on reducing hours worked rises with the amount of the allowance. Third, how hours worked responds to an allowance differs with the education expectation of youths. Youths with high school degrees or GEDs but not enrolled in a college are the most insensitive to a change in the allowance.

The second chapter seeks to analyze the effects of participation in a school-to-work (STW) program on wages of youths in their first job immediately following high school graduation. The empirical method used is a newly developed propensity score estimator. The results show that (1) participation in school-to-work programs has a positive effect ranging from 3.2 percent to 5.8 percent on wages in first primary job immediately following high school graduation; (2) school-based programs are more efficient in increasing the hourly wage than work-based activities because the estimates are not only more significant but also they have larger magnitudes; (3) the effects of particular types of STW programs on wages are not equal. In particular, the coop-education and mentoring activities are the most effective in performing this initiative, which raise wages by 3.8 to 7.7 and 3.9 to 7.7 percentage points per hour, respectively; (4) there is no significant gender difference in the effect of participation in school-to-work programs.