This paper presents and estimates a dynamic model of married women's labour force participation and fertility in which the effect of work experience on wages is explicitly taken into account. Because current participation alters future potential earnings, the investment return to work will be an important factor in the current work decision in any forward-looking behavioural model. The model is estimated using the National Longitudinal Surveys mature women's cohort. We use the estimates of our model to predict changes in the lifecycle patterns of employment due to changes in schooling, fertility, husband's income, and the magnitude of the experience effect on wages. We find that although work experience increases the disutility of further work, the effect is overwhelmed by the positive effect of experience on wages, leading to persistence in the employment patterns of these women. In addition we find that an increase in young children and in husband's income substantially reduces participation while increased schooling has a powerful positive impact on participation.

We develop a model of crime in which the number of police, the crime rate, the arrest rate, the employment rate, and the wage rate are joint outcomes of a subgame perfect Nash equilibrium. The local government chooses the size of its police force and citizens choose among work, home, and crime alternatives. We estimate the model using metropolitan statistical area (MSA)-level data. We use the estimated model to examine the effects on crime of targeted federal transfers to local governments to increase police. We find that knowledge about unobserved MSA-specific attributes is critical for the optimal allocation of police across MSA’s.