This dissertation consists of two empirical papers that investigate the return to education in Jamaica and the effect of federal assistance on state spending on Old Age Assistance. Paper one investigates the wage determination process in Jamaica in light of the heavy subsidization of all three levels of education from public resources. The results imply that highly educated workers prefer public sector employment. Whereas the private sector appears to value workers with A-levels (comparable to the AP designation in the United States) the public sector is prepared to pay University graduates the highest premium. The second paper analyzes the efficacy of federal grants on state spending for Old Age Assistance (OAA). Under this program, states had two variables at their disposal: the number of recipients and the benefit level. States are found to be very responsive to changes in the price of offering additional benefits and of expanding coverage as well as to the income they receive from the federal government. The statistical significance of the cross and own price elasticities reinforces the importance of separating the two prices in investigating this relationship.