This dissertation examines whether the Earned Income Tax Credit (EITC) program improves long-term labor force participation of its recipients. The first chapter studies the mechanisms which can generate prolonged effects of wage subsidies on employment, wages, job stability and poverty. I model three mechanisms: experience accumulation, heterogeneity in the job offer arrival rates, and the costs of switching in and out of employment. I estimate the dynamic discrete-choice model of employment and program participation using a sample of single women from Panel Study of Income Dynamics. The estimates suggest that the EITC program primarily stimulates part-time employment. EITC recipients do not become self-sufficient over the long-term because part-time experience accumulation does not translate into substantial wage growth. The interaction between EITC and other public assistance programs also makes part-time jobs desirable. Counterfactual experiments reveal that in order to promote human capital accumulation and wage growth, the number of hours worked should become one of the determinants in the EITC payment schedule. The second chapter estimates the life-long effects of the EITC program on employment decisions of single women. To identify those effects I choose a natural experiment framework and use the discontinuity in the eligibility criteria (and payments) associated with the age of the youngest child in the household. I estimate a model with a conditional (fixed-effect) logistic regression using a sample of single women from Panel Study of Income Dynamics. The estimates suggest that there is no significant life-long effect of the EITC program on female labor force participation. The result is robust to the definition of the control group and the length of the estimated long-term effects. This conclusion supports the concerns that low-skilled workers do not accumulate experience required for a better employment opportunities. That being said, EITC should be considered solely as a short-term subsidy rather than a long-term investment into experience accumulation.