UC Irvine

In this dissertation I provide new evidence regarding the relationship between the Earned Income Tax Credit (EITC) and Child Achievement, and I present evidence relating to the optimal usage of minimum wage policy. In chapter one, I estimate the contemporaneous impact of the EITC on the achievement of children of single mothers. I find little evidence of a relationship. In chapter two I review a paper that was recently published in The American Economic Review which finds a very strong positive relationship between the EITC and child achievement. I present evidence suggesting that this evidence is flawed. From the evidence presented in chapters one and two I conclude that, while it is certainly possible that the EITC affects child achievement, we are still looking for good evidence of an effect. In chapter three I analyze changes in the target efficiency of the federal minimum wage over the past 25 years. Using static simulation methods, I find that minimum wage target efficiency is currently close to its 25-year peak. Furthermore, I find a very strong positive relationship between minimum wage target efficiency and the real federal minimum wage. The implication is that, from an efficiency standpoint, a good time to raise the minimum wage is when it is already high. This discovery raises the possibility that the minimum wage increases the employment of low-skilled poor individuals relative to the employment of low-skilled non-poor individuals.