We study the short-term impact of Connecticut's Jobs First welfare reform experiment on women's labor supply and welfare participation decisions. A nonparametric optimizing model is shown to restrict the set of counterfactual choices compatible with each woman's actual choice. These revealed preference restrictions yield informative bounds on the frequency of several intensive and extensive margin responses to the experiment. We find that welfare reform induced many women to work but led some others to reduce their earnings in order to receive assistance. The bounds on this latter “ opt-in” effect imply that intensive margin labor supply responses are nontrivial.

We use data from the Head Start Impact Study (HSIS) to evaluate the cost-effectiveness of Head Start, the largest early childhood education program in the United States. Head Start draws roughly a third of its participants from competing preschool programs, many of which receive public funds. We show that accounting for the fiscal impacts of such program substitution pushes estimates of Head Start’s benefit-cost ratio well above one under a wide range of assumptions on the structure of the market for preschool services and the dollar value of test score gains. To parse the program’s test score impacts relative to home care and competing preschools, we selection-correct test scores in each care environment using excluded interactions between experimental assignments and household characteristics. We find that Head Start generates larger test score gains for children who would not otherwise attend preschool and for children who are less likely to participate in the program.

There is growing evidence that firm-specific pay premiums are an important source of wage inequality. These premiums will contribute to the gender wage gap if women are less likely to work at high-paying firms or if women negotiate (or are offered) worse wage bargains with their employers than men. Using longitudinal data on the hourly wages of Portuguese workers matched with income statement information for firms, we show that the wages of both men and women contain firm-specific premiums that are strongly correlated with simple measures of the potential bargaining surplus at each firm. We then show how the impact of these firm-specific pay differentials on the gender wage gap can be decomposed into a combination of sorting and bargaining effects. We find that women are less likely to work at firms that pay higher premiums to either gender, with sorting effects being most important for low- and middle-skilled workers. We also find that women receive only 90% of the firm-specific pay premiums earned by men. Importantly, we find the same gender gap in the responses of wages to changes in potential surplus over time. Taken together, the combination of sorting and bargaining effects explain about one-fifth of the cross-sectional gender wage gap in Portugal.