Evaluation of the Australian Wage Subsidy Special Youth ...

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Heckman, Lalonde and Smith (1999) p1912 clearly point out that different choices about
data handling such as variable choice and decisions about whom to include in the sample
can strongly influence the measurement of treatment impacts. To avoid differences
arising from this source, the initial replication is made as close as possible to that of the
original. Using the reported bivariate probit equation in Richardson (1998) Tables 4 and 5,
the variables matching those described are selected for use in the estimation. This means
that the same identifying restrictions are applied. Thus, CEP referrals and age are
excluded from the employment equation but included in the selection equation,
additionally in the employment equation qualifications, children, marital status and health
affecting work are 1985 or 1986 dated and in the selection equation they are 1984 dated.
The same set of base variables are used for the equations as that of Richardson (1998) by
reference to the reported bivariate probit results. The variables are described in detail in
Appendix 1: Data Appendix, Table 1. Analysis was carried out in STATA 7.0.
3.4 Replication results
The results of replication for the bivariate probit are shown in Table 3.1, parts a and b. To
facilitate comparison of the replication result with the original results, the estimates as
shown in Richardson (1998) Tables 4 and 5 are repeated in column 1 of Table 3.1 part a
and part b. Table 3.1 part a shows the employment equation of the bivariate probit, while
Table 3.1 part b shows the selection equation of the bivariate probit which models the
entry into SYETP. The second column of Table 3.1 gives the replication estimates.
The replication is found to be generally successful. The replicated results match closely
those of Richardson (1998). There is some minor variation, but at the 2 decimal places
level, most estimates of the coefficients are identical. There is slightly more disparity in
the t-statistics. The coefficient of key interest is the SYETP variable in the employment
equation, which measures the treatment effect. In this case, the replication result is
slightly larger, and the t-statistic is also larger. However, in no instance does the
replication report results that are not closely comparable to those reported in Richardson
(1998). The appendix Tables A2.0a and A2.0b show the replicated univariate probits, for