Essays in Labor and Development Economics

This dissertation provides program evaluation and policy analysis evidence from USA and Iran. The first chapter studies the impact of paid leave legislation on women employment. We employ California’s first-in-the-nation Paid Family Leave program to draw inference using difference-in-differences and triple differences methods. The change in the employment outcomes for women before and after this program is compared to the change in similar outcomes for a set of control groups. We find that women’s employment increased in the intensive margin but not extensive margin. We also find that wages increased for married prime-age and decreased for highly educated young women.

The second chapter provides evidence on the impact of a nation-wide unconditional cash transfer program in Iran on labor supply. As compensation for the removal of bread and energy subsidies in 2011, the government of Iran started monthly deposits of cash into individual family accounts amounting to 29% of the median household income. A popular outcry against the subsidy reform program has focused on the negative labor supply effects of the cash transfers on the poor. We use panel data to study the impact of these transfers on the labor supply of poor households and individuals during the first two years of the program, before inflation reduced their value.

We use the exogenous variation in the value of the cash transfers relative to household income to estimate the impact of the transfers on labor supply of individuals using fixed effects method. We also use a difference-in-differences methodology using the variation in the time households first started receiving transfers. Although everyone was eligible to receive cash transfers starting January 2011, about 20 percent of the households who for one reason or another did not submit their application in time, started receiving it three months later. Neither set of results support the hypothesis that cash transfers reduced labor supply as measured by hours of work or probability of employment.

The third chapter analyses what happens to the welfare of households and the budget of the government if it implements further price reforms in Iran. Five years into the reform, energy prices in Iran were still well below international levels. The impacts of a gradualist approach to price increase versus a one-off approach are simulated in this chapter. Under the gradualist approach government savings (reduction in foregone earnings) from selling subsidized items will increase by 20.2 trillion Rials or 0.18 percent of GDP in 2014. Half of these savings is needed as transfers to households to keep the poverty rate constant by paying each person 17,059 Rials per month. A one-off price increase would have a large effect on poverty and would require transfers equivalent to 203,775 Rials per person per month. Government savings after transfers would equal 96.4 trillion Rials or 0.87 percent of GDP.