Date of Award

May 2015

Degree Type

Dissertation

Degree Name

Doctor of Philosophy (PhD)

Department

Economics

Advisor(s)

Perry Singleton

Subject Categories

Social and Behavioral Sciences

Abstract

This dissertation studies the effects of public programs that target at disadvantaged population. In particular, I examine the effects of these programs on individual well-being and whether these programs lead to behavior distortions. The dissertation consists of three essays that focus on different policy contexts and different populations.

In the first essay, I examine the effects of an active labor market program on the labor market outcomes of veterans. In the 1990s, the US Department of Defense implemented the Transition Assistance Program (TAP) to help military personnel transition to the civilian labor market. The program provides career counseling, employment workshops, and information briefing on educational and medical benefits through the Department of Veterans Affairs. The goal of this study is to measure the long-run effects of TAP on the labor market outcomes of veterans. To identify these effects, I exploit variation in program accessibility generated by its initial rollout process. Using data from the veterans supplement to the Current Population Survey, survey years 2001, 2003 and 2005, I find that TAP improves the labor market outcomes of veterans, measured approximately ten years after their separation from the military. The effects of TAP on labor market outcomes vary across veterans with different lengths of military experience, and these effects attenuate over time. One possible mechanism is that TAP encourages use of the GI Bill, a program that provides tuition reimbursement and a monthly allowance to attend institutions of higher education. Moreover, the effect of TAP is concentrated among participants who, based on self-reports, find TAP most helpful in career related services.

In the second essay, I examine linkages between Medicaid availability, insurance coverage for pregnant women, use of prenatal care and the health outcomes of newborns. Medicaid coverage for pregnant women would potentially improve health outcomes of newborns by providing medical services at no cost. At the same time, Medicaid provides an incentive for eligible individuals to drop private insurance coverage. I exploit variation from two federal Medicaid expansions in mid-1980s, which eliminated the eligibility discontinuity across age groups. The main data come from the National Hospital Discharge Survey and the Vital Statistics Birth Records. I employ a difference-in-differences method. Findings suggest that the expansions led to a relative increase in Medicaid coverage for women from the immediately affected age group by a significant 6.5 percentage points. However, up to 60% of new beneficiaries would have been covered by private insurance, absent of the expansions. Findings do not reveal significant improvement in birth outcomes, or increase in prenatal care utilization.

In the third essay, I examine the effect of Medicaid on the asset holding behavior of the elderly. Medicaid provides coverage for nursing home care to elderly with limited resources. The eligibility rule potentially creates an incentive for the elderly to reduce their asset by making transfers to children. This study provides empirical evidence for the effect of Medicaid nursing home care policy on elderly's asset allocation. I exploit a policy change in 2006, the Deficit Reduction Act 2005, which imposed stricter penalty to asset transfer behavior when determining Medicaid eligibility. Using data from the Health and Retirement Survey, I employ a difference-in-differences method. I find that the elderly who anticipated nursing home entry significantly reduced asset transfer behavior by 3.2 to 4 percentage points, in response to the policy change. The result is robust across demographic groups and more pronounced for the elderly with the highest nursing home entry risk. The findings provide evidence of moral hazard in the public insurance market: the elderly would game with the system in anticipation of nursing home needs.

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