Abstract

This thesis uses a structural modeling approach to assess labour supply and evaluate policy programs.

The first chapter compares labour market outcomes for high school dropouts to graduates in Quebec, Ontario, Alberta, and British Columbia. Results show that dropouts face worse outcomes across all provinces, with Quebec having a significantly higher proportion of male dropouts. Simulations aimed at boosting employment incentives for low-skilled individuals emphaise the importance of long-term strategies that enhance skill acquisition and reduce financial barriers. Current welfare eligibility criteria offer limited incentives to transition from welfare to work at modest wages.

The second chapter focuses on modeling individual heterogeneity, particularly unobserved characteristics, using random coefficients. It uses Monte Carlo simulations across six scenarios with varying shapes and variances for the distribution of unobserved characteristics. Findings reveal that methods accounting for heterogeneity perform well when variances are small, but become sensitive to distribution shapes as variances increase, indicating the need for more flexible models in high-variance contexts.

The final chapter examines the labour supply of single mothers, with a focus on childcare utilisation and social assistance participation. Contrary to traditional views, the study finds that childcare costs are no longer a significant barrier to employment, with access to childcare being a more critical issue. Policies targeting direct employment incentives may be more effective in increasing labour force participation. The chapter also highlights the role of unobserved preferences in shaping work decisions, suggesting that current programs may be limited by not fully addressing these behavioural factors.