Three essays on the impact of welfare policies

This dissertation studies the impact of welfare policies in India and the United States with an emphasis on the indirect effects on children’s well being. Welfare policies, especially policies that target poverty alleviation, have been shown to increase employment and family income. I explore their potential to have secondary effects on children’s health and education and to have long run effects. I analyze three large public welfare policies, the Mahatma Gandhi National Rural Employment Guarantee Act (NREGA) in India, the WWII GI Bill in the United States and the Earned Income Tax Credit (EITC) in the United States. The first chapter studies NREGA in India, the world’s largest public works program, which has increased employment and wages in rural India. Using a regression discontinuity with difference-in-difference empirical strategy based on a unique method used by the government to roll out the program in three phases, I find that the program significantly increased child health investments, reduced child mortality and increased children’s ability to complete math and reading exercises. The second chapter studies the WWII GI Bill in the United States, which provided generous education financial support to veterans and is popular for having increased college education. Using a regression discontinuity design based on the sharp fall in eligibility across birth cohorts due to the enlistment method, I find that the WWII GI Bill also caused a significant increase in high school completion and in the long run an increase in employment and a decrease in poverty. The third chapter studies the EITC in the United States, which is a tax credit scheme that supplements earned income and has increased employment particularly for single mothers with high school level of education or below. Using the differential increase in 1993 in the tax credit generosity across families with one child and families with two or more children, I find that the program increased child health insurance coverage, especially through private health insurance. The analyses of the three programs demonstrate that welfare policies can indirectly benefit children’s development and have positive effects in the long run, which should be included in their evaluation.