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Since 1990, Taiwan increased the college share of its labor force from 7% to 28% by converting junior colleges to 4-year colleges. Such a rapid surge in skill supply should suppress college wages and lower income inequality. Instead, inequality rose steadily. The surge of weaker college graduates made them weak substitutes for better trained college graduates, increasing wage inequality within skill groups. The college premium would have been 15% higher had college quality remained unchanged at its 1992 level. The Taiwan case shows that increasing college access alone will not lower income inequality unless college quality is maintained.

Using Iowa state administrative data for the period 1993-95, this paper explores why some low-income households successfully leave public assistance while others who leave later return. The authors examine the role of employment, child support, earnings, and other support such as the Food Stamp Program (FSP) for recipients who leave Iowa's Family Investment Program (FIP). They also examine reasons for recidivism over time, with specific attention to local labor market conditions and factors that differentiate areas by degree of rural/metro location. The data show that, among those active in FIP in all months of the two-year period, employment increased. Multivariate analysis of recidivism shows that during the first two quarters, those in nonmetro areas were more likely to return to FIP; however, after this initial period, the risk of return was very similar in the two areas. This analysis provides specific results for better understanding of the impact of recent reforms on low-income households in a state that is relatively rural.

This paper examines welfare participation dynamics during 1993-96, the initial years of Iowa's welfare reform, a reform remarkably similar to the state's current Temporary Assistance for Needy Families (TANF) program. Analyses of the Family Investment Program (FIP) participation over the program's first two years show that, on average, FIP recipients stayed fewer months in the second year compared with the first, although a relatively large share of participants (36 percent) stayed on for the full two years. A fixed effects model and a semiparametric duration model are used to examine welfare dependence and recidivism. Iowa's experience suggests that human capital, child support, marital status, and the presence of children will be significant factors in reducing time on TANF and recidivism. Child support and wage income are crucial in determining the degrees of success for exiting and staying off, especially during the early months of the exit.

In 1993, the State of Iowa, through waivers, implemented reforms to its welfare program creating the Family Investment program (FIP), a program similar to the Federal Temporary Assistance to Needy Families (TANF) program created in 1996. This paper examines the experiences of individuals and families who left FIP during the initial years. The program is designed to help FIP recipients achieve economic self-sufficiency. The analysis of linked state administrative record data and other local data shows that the Iowa experience has been relatively successful in supporting the transition of those leaving FIP. Almost three fourths of those leaving the program remained off for at least 12 months. Higher wage and child support collections were important factors in determining who would leave the program and their ability to stay off of public assistance. The food stamp program functions as a safety net and is an important income source for those who leave FIP. The success of moving people out of FIP in the long run requires finding low-income individuals a stable job and higher paid work.

Health, like schooling, is a form of human capital and can be expected to be positively related to labor productivity and labor supply. The production of good health and labor productivity, however, sometimes competes with an individual's lifestyle, e.g., binge drinking. In this study, an individual's health has three dimensions: current health status, binge drinking which is an unhealthy lifestyle, and stature or mature height which is a young adult's health endowment. This study presents and fits a dynamic model of an individual's demand for health, demand for binge drinking, labor supply, and wage or demand for labor equations to NLSY 1979 cohort panel data of young people. We find that binge drinking has a negative but insignificant effect on the demand for health, an individual's good health and larger stature increases his/her wage and binge drinking reduces it. An individual's good health and binge drinking increase his/her labor supply. An individual's decision to binge drinking is shown to be rational addiction which is forward looking (rather than myopic which ignore future impacts) and to be highly responsive to the price of alcohol in the long run and to the legal minimum drinking age. We also show that labor productivity of 1979 NLSY cohort is most likely 6 percent lower than earlier cohorts due to their higher frequency of binge drinking, shorter stature, and lower educational achievement.