Evaluation of the Australian Wage Subsidy Special Youth ...

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252 Treated propensity scores, Epan Untreated propensity scores, Ep 8 6 4 2 0 0 .1 .2 .3 .4 Pr(syetp) kernel densities of propensity scores of the treated vs untreated Figure 7.9 Kernel densities of the propensities estimated for new specification
253 8: Summary and Conclusions The underlying motivation for this work is the desire for a closer examination of the Australian wage subsidy SYETP. The main theoretical rationale for wage subsidies is that they stimulate a gain in employment. However the review of the theoretical models of wage subsidies shows they cannot provide unambiguous proof of an increase in employment. The importance of empirical evaluation of wage subsidies in part stems from this uncertainty. The central question remains: do wage subsidies improve employment prospects for the individual? Microeconomic evaluation evidence can demonstrate whether SYETP has led to a gain in employment for participants. While the main evaluation interest is the programme influence on job entry, the processes of participation and job entry can involve both observable and unobservable components that can introduce selection bias. An evaluation of the program effect needs to account for this selection. Two evaluation methods are explored here – the Heckman selection bivariate probit model, and matching methods, in particular propensity score matching. Both identify a parameter corresponding to the mean effect of treatment on the treated, which can be used to decide whether the programme leads to employment gains. However each method uses different assumptions to achieve this. Selection on unobservables is assumed by the Heckman bivariate probit, while selection on observables is assumed by matching methods. The review of recent overseas evidence for wage subsidies shows a variety of positive and negative impacts. Two key themes are identified. The empirical ambiguity as to employment gains from wage subsidies remains unresolved. Contributing to this, in many studies the non-experimental evaluation methods insufficiently test the assumptions, alternative methods, and data issues. It was noted that meta-analysis might be more satisfactory in accounting for the deviations in evaluation evidence, since it was hard to
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i Evaluation of the Australian Wage
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v Declaration I hereby declare that
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in method and assumptions. The orth
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3.3 Data and variables used for est
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List of Tables and Figures Figure 1
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Table A2.0b Univariate Probit of pa
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xv Abstract The job subsidy Special
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1 1: Wage subsidy theory and evalua
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3 programs of providing benefits an
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5 The empirical methods used for th
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7 how the outcomes from these metho
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9 employment effect could be mainly
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11 Real Wage Employment Figure 1.1:
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13 are two types of unemployment, s
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15 Real wages are predetermined whe
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17 Vella (1998), Heckman, Lalonde a
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19 Each individual has two potentia
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21 this case, if there was no data
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23 correlation for the error of the
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25 Table 1.3 collects together some
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27 Table 1.3 Brief overview of rece
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29 necessarily brief. Then, the evi
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31 limited applications, such as fo
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33 who participated. It was conclud
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35 term unemployed for over 12 of t
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37 importance of the subsidy second
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39 differences in characteristics t
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41 Matching methods are theoretical
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43 2.2 SYETP implementation As SYET
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45 In July1978, the subsidy was cal
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47 In January 1979, variations were
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49 benefits were paid at a slightly
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51 2.2.3 SYETP operation Earlier re
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53 ceiling constraints’ applied t
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55 Award Conditions for employment
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57 Harris (2001) claims that during
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59 display boards listed details of
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61 restriction was used. If there w
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63 to the end of the 1980’s. An o
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65 for teens overall had risen, emp
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67 for Australia using data from th
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69 training, can provide a form of
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71 employer survey estimates were t
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73 provisions for SYETP and extende
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75 withdrawals occurred at similar
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77 Table 2.17 State usage of progra
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79 2.3.1 Stretton (1982, 1984) 53 S
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81 Stretton attributed the success
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83 included in the employment model
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85 completers. Their argument was t
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87 was an issue for the data. Unlik
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89 Table 2.21 Richardson (1998) Est
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91 2.3.5 General discussion Some ge
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93 Controlling for differences in i
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95 taken by a previous researcher a
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97 If employability is assumed to b
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99 suitability of the underlying as
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101 Heckman, Lalonde and Smith (199
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103 effect on employment relative t
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105 Table 3.1, Part A Employment eq
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107 (-1.80) (-1.80) Tradesperson -0
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109 duration of Pre-June 1984 unemp
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111 4: Study 2 Propensity score mat
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113 Propensity score matching provi
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115 4.2 Propensity score matching m
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117 covariates that influence the a
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119 (7) E(Y c | D=1) = E P(X) {E[Y
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121 For CIA to be plausible, a ‘r
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123 employment and programme partic
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Highest qualification in 1984 (1.56
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127 4.6 Distribution of the propens
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129 Figure 4.3 Histograms of estima
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131 Table 4.5 Summary statistics fo
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133 Table 4.5, that the variance of
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135 Table 4.6 Matching results, Sin
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137 Table 6.3 using Swedish data wi
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139 matching is the ability to weed
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141 Table 4.7 Matching results, All
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143 the unobserved component. If th
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145 5: Study 3 Attrition and non-re
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147 occur by design, because the mi
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149 (1990) extended and improved th
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151 (10) A* = δ 0 + δ 1 x +δ 2 z
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153 again from September to Novembe
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155 5.5.2 Univariate examination of
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157 lower, the job lengths are only
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159 Work limited by health 1984 0.1
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161 The characteristics of the SYET
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163 para-professional Mother not em
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165 comparison group where the shar
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167 5.5.4 Attrition: natural attrit
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169 both sources that impose change
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171 para-professional Father not em
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173 work in later sections, this su
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175 Table 5.6: Effect of selection/
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177 appropriate to discard these fr
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179 Australia/Tasmania. Amongst tho
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181 Table 5.5a Summary statistics b
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183 5.6.1.2 Effects of the non-resp
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185 3 years + -0.35 -0.47 -0.34 -0.
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187 5.7 Multivariate analysis of ef
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189 proportion of time spent unempl
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191 post-school qualification, and
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193 Generally, those variables foun
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195 longj0 Longest job by 1984 < 1
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197 adopted in order to maintain co
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199 6: Study 4 Weighting to counter
Page 217 and 218: 201 Table 6.1, part A Employment eq
Page 219 and 220: 203 Methodist 0.133 0.261 (0.77) (1
Page 221 and 222: 205 CEP referrals 1984 0.143* 0.128
Page 223 and 224: 207 6.2 Results of weighting the PS
Page 225 and 226: 209 The distribution of the propens
Page 227 and 228: 211 Table 6.3 Weighted probit used
Page 229 and 230: 213 (0.76) Tradesperson mtrad 0.20
Page 231 and 232: 215 Table 6.5 Summary statistics fo
Page 233 and 234: 217 Table 6.7 Matching results, sin
Page 235 and 236: 219 6.3 Discussion The comparison o
Page 237 and 238: 221 the selection into SYETP and th
Page 239 and 240: 223 Heteroskedasticity is a violati
Page 241 and 242: 225 Table 7.1, Part A Employment eq
Page 243 and 244: 227 (1.26) (1.28) (1.16) Mothers oc
Page 245 and 246: 229 Other Post-School qualification
Page 247 and 248: 231 7.1.2 Exclusion restriction in
Page 249 and 250: 233 Finally, the third panel of new
Page 251 and 252: 235 Table 7.2 summary of changes to
Page 253 and 254: 237 schooling that was statisticall
Page 255 and 256: 239 (0.25) (0.21) 3 years + -0.50 -
Page 257 and 258: 241 Table 7.4 Summary of distributi
Page 259 and 260: 243 7.2.2 Propensity score matching
Page 261 and 262: 245 original model, but with the pe
Page 263 and 264: 247 maintained, then the Heckman bi
Page 265 and 266: 249 Table 7.6 Weighted Probit used
Page 267: 251 Table 7.7 Summary of distributi
Page 271 and 272: 255 over which it ran, the review m
Page 273 and 274: 257 the Heckman and PSM methods wer
Page 275 and 276: 259 posited that that such sensitiv
Page 277 and 278: 261 Description Derivation and deta
Page 279 and 280: Appendix 2 Tables 263
Page 281 and 282: 2 years 0.28 0.07 (1.70) (1.70) 3 y
Page 283 and 284: 267 Table A2.0b Univariate Probit o
Page 285 and 286: 269 Religion brought up in (1.52) (
Page 287 and 288: 271 hq9_84 Year 9 of school or less
Page 289 and 290: 273 Table A2.1 Continued Means and
Page 291 and 292: 275 mtrad Tradesperson 0.04 0.04 0.
Page 293 and 294: 277 Year 9 of school or less -0.19
Page 295 and 296: 279 Table A2.3 Probit of SYETP part
Page 297 and 298: 281 (0.22) (0.44) (0.67) (0.89) Tra
Page 299 and 300: 283 Table A2.5a Univariate probit f
Page 301 and 302: 285 Manager/professional/para-profe
Page 303 and 304: 3 years + -0.04 (2.13)* CEP referra
Page 305 and 306: 289 Table A2.6 Part A Employment eq
Page 307 and 308: 291 Table A2.6 Part B Selection/par
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BLMR Bureau of Labour Market Resear
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Fay, R.G. (1996) "Enhancing the eff
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Heckman J.J. and Smith, J. A. (1998
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Lewis, H.G. (1963) "Unionism and re
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Quandt, R. (1972) "A new approach t
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Stromback, M. and Dockery, A. (2000
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