Evaluation of the Australian Wage Subsidy Special Youth ...

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As would be expected where the same caliper widths were used, the same numbers of
SYETP cases were matched. But the number of comparisons that could be matched from
within the radius is much greater for every caliper, growing from 462 matched to the 87
SYETP in the 0.001 caliper, to 920 comparisons matched to the 104 SYETP in the 0.05
caliper. The good common support for the treated and the great size of the comparison
group contribute to the large number of comparison that could match within each caliper.
The standardised bias is smaller than found for the same caliper when pair matching was
used, but not dramatically. Once again, all the mean differences in employment are
statistically significant. The difference in employment varies in size more across the
different caliper widths than for pair matching. The difference in employment found for
the 0.001 caliper varies from 0.18 for pair matching to 0.14 for the all-in-radius matching.
However, for the 0.005 caliper the difference is very small, with 0.18 for pair matching to
0.17 for the all-in-radius matching. The mean difference in employment for the 0.05
caliper (0.15) is more similar to that for the 0.001 caliper (0.14). The difference in
employment does not then grow generally with the greater caliper. This suggests that
similar propensity scores do not smoothly relate to similar employment outcomes.
Comparing the estimate employment effects of SYETP in Table 4.8 to those of Table 4.7
also gives variable results. At the caliper width of 0.001, ‘all in radius’ PSM gives a net
employment effect of 0.14 percentage points while nearest neighbour PSM gives 0.18.
However for calipers 0.005 to 0.02, the estimates are very similar in size, but diverging
again for caliper width 0.05. Generally the ‘all in radius’ impact estimates are smaller.
Overall, it is difficult to judge which PSM protocol is preferable. However, all-in-radius
matching is not found used in the literature very often, and most literature apply pair
matching, although some newer literature also applies kernel matching. From these
results, where the differences are usually slight, the gains to be had from all-in-radius
matching appear to be small relative to pair matching for this data. As such, pairmatching
is concluded to be the most useful algorithm and also conforms to the great
majority of the literature. This is then applied in the later analyses in following chapters.