Evaluation of the Australian Wage Subsidy Special Youth ...

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original model, but with the peaks at lower points in the distribution. The central peak of
the SYETP propensities has been changed most. The mean of the propensities for the
treatment SYETP has been shifted much lower down than for the original specification,
while the mean of the comparisons has hardly changed. Figure 7.9 shows the kernel
densities of the SYETP and comparison distribution of propensities overlaid. The peak of
the SYETP is raised higher than before. This is likely due to the bunching effect of
reducing the range. The peak of the distribution of propensities for the comparison is
lower than before, but the upper tail is slightly fatter, so the reduction in range for the
comparisons has a more diffuse impact. The change to the specification has brought the
peaks of the SYETP and comparisons closer in height than before. The different locations
of the propensity peaks for the SYETP and comparisons indicate that the participation
model is still producing an adequate model that distinguishes participation.
The effects of the new specification on the matching results are shown in Table 7.5. The
number of SYETP matched is raised to 104. No cases have been dropped due to
application of the common support rule. The number of cases of comparisons matched to
the SYETP is higher than before at 93 cases, while more are also used with replacement.
The mean difference in propensities is no different to that found before. 165 The mean
standardised bias after matching is now worse than before however, as it has risen from
11.04 to 14.48. However, in comparison to the other specification change, where CEP
referrals was excluded from the original model, shown in column 2 Table 7.5, the bias
has improved. As the bias was much worse where CEP referrals was excluded than the
original model, CEP referrals seems to have helped balance the bias.
D’Agostino and Rubin (2000) consider the issue of missing data in item non-response,
and note that most propensity score methods are based on complete data. They suggest
that missing-ness needs to be controlled in PSM. This suggests the new specification may
also benefit from the reduction in missing data due to item non-response, which may help
explain the great gain in size and statistical significance of the measured employment
effect. In the new specification, only the proportion of time unemployed contains missing
165 Although rounding hides that the mean is very slightly smaller at 0.00016.