Understanding the Effects of Workfare Policies on Child Human Capital

Abstract

Workfare can impact child development by inducing parents to spend less time at home. I study the mechanisms by which workfare policies affect children using the New Hope workfare experiment. The program randomly assigned individuals to a policy bundle including income and childcare subsidies conditional on full-time work. For families with young children, the program had positive effects on child academic performance and classroom behavior. Counterfactual experiments from a dynamic discrete choice model indicate that most of the effect of New Hope on young children is explained by parents enrolling their children in center-based childcare.