Evaluation of the Australian Wage Subsidy Special Youth ...

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over which it ran, the review makes it clear SYETP underwent repeated adjustment, with
the eligible groups, amount and length of subsidy, political setting, and economic
conditions constantly changing. This gave perspective into the dynamic aspects of labour
market programmes, which is often ignored. Micro-evaluations are essentially static, so it
is important to maintain awareness that they provide only a snapshot of the employment
effects relevant to a particular macroeconomic setting.
The summary of the economic context during the period of our empirical studies, 1984-
1986 provided characterisation of the Australian youth labour market that SYETP
addressed. Youth minimum wages were institutionally set by the award wage system, and
were lower relative to adults. Youths earned about 50-60 per cent of adult wages.
Although youth unemployment was high relative to adults, this was countered by rising
school participation, and employment. The regional and rural/urban contrasts in Australia
contributed to wide variation in the incidence opportunities and unemployment. The CES
administered SYETP, but faced a limited supply of registered vacancies that were
generally for lower-skilled occupations.
Other factors, which have been reviewed here, would also have had a role in affecting the
functioning of the SYETP subsidy, including lower relative youth labour costs, elastic
demand for youths relative to adults, and substitutability of formal education for on the
job training in human capital. There were minimum wages, which would give
institutionalised inefficiency of the labour market. Finally, the value of SYETP payments
to employers was greater than the unemployment benefits to the eligible unemployed
youths, and in turn participants received Award wages that were greater than benefit
payments (usually substantially greater). The theory of wage subsidies outlined in
Chapter 1 indicates how these might influence the potential for employment gains from a
wage subsidy targeted at youths. Together, these features favour the suggestion that
SYETP might have given employment gains to those eligible. However, it is impossible
in this context to determine whether these features were caused by SYETP, or were
merely the backdrop influencing SYETP operation.