Evaluation of the Australian Wage Subsidy Special Youth ...
Evaluation of the Australian Wage Subsidy Special Youth ... Evaluation of the Australian Wage Subsidy Special Youth ...
24 was carried out. In this respect, they found that women appeared to consistently have had gains, while there were no youth gains and for men there was great variation and uncertainty of the presence of gains. Heckman, Lalonde and Smith (1999) noted that the major evaluations in the US have often focused on earnings rather than employment gains from programs. They concluded that the evidence from both the North American and European studies indicated only a modest gain in the probability of employment. However, it was found that many nonexperimental evaluations were lacking in their exploration of methodological issues, such as the appropriate choice of evaluation method. For both Friedlander et al. (1997) and Heckman et al. (1999) the overview encompassed an immense variety of programs, time periods and methods. As a result the conclusions are not specific, but instead they provide an impression of the uncertainty that still remains as to the empirical effectiveness of programs in achieving gains. Fay (1996) conducted a review of OECD active labour market program evidence, including wage subsidies to the private sector. Subsidies were concluded to be useful for long-term unemployed or women re-entrants, with this drawn mostly from the US JTPA- II-A experimental evidence. It was found impossible to harmonise the results for the different outcome measures and means of achieving the evaluations and it was commented that robust evaluation results were scarce. In particular they recommended it was important to make non-experimental evaluations more rigorous, and consideration made to testing alternative model specifications, together with greater data collection (Fay (1996): 33). Marx (2001) reviews targeted employment/wage subsidies, for OECD countries mostly in Europe but also Australia. The conclusion is that little evidence exists for a beneficial effect on employment prospects, with a variety of negative impacts, limited impact size, and some few positive results.
25 Table 1.3 collects together some recent European employment effects found in evaluation of wage subsidies. The direction and significance of the estimated effect of the program is presented only, as the scope of this limited overview precludes reference to the details of the various programs, their targeting, and the empirical methods employed. As for the reviews already summarized, there is variation in the effects even when the size of the effect is not considered. Some are not statistically significant, some are negative and others are positive. Once more, the uncertainty remains of whether wage subsidies provide employment gains empirically. However, it is unlikely that any overview or literature review can account for the extraordinary amount of variation that could be the source of these varying evaluation results. A meta-analysis might generate some conclusions. Meta-analysis, in particular meta-regression analysis, has developed in the past two decades into one of the most important instruments for the synthesis of quantified evaluation findings. In metaanalysis, the dependent variable is a standardized measure of effect estimated in each of a set of studies that is representative of a field of inquiry. This dependent variable may then be used in two very different ways. One approach, which is dominant in medicine and psychology, focuses chiefly upon the derivation of an appropriately weighted average effect from the set of studies. Meta-analysis, in this approach, is employed to extract a superior estimate of what is regarded as the true effect. The other approach, which is more appropriate to economic evaluations, is primarily concerned with explaining the nature and sources of the between-studies variation in the estimates. This variation is regarded as representing genuine heterogeneity in impacts. This would be the more appropriate analysis for generating conclusions in this context. Examples are Stanley and Jarrell (1998), who examined estimates of the gender pay gap in the USA, and Ashenfelter et al. (1999) who examined rates of return to schooling from several industrialised countries. Although a useful proposal for future research, a meta-analysis is however not within the range of this research. However, as the economic environment within a country can set up a unique context, the theory of wage subsidies does not predict that wage subsidies will work in all these
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24<br />
was carried out. In this respect, <strong>the</strong>y found that women appeared to consistently have had<br />
gains, while <strong>the</strong>re were no youth gains and for men <strong>the</strong>re was great variation and<br />
uncertainty <strong>of</strong> <strong>the</strong> presence <strong>of</strong> gains.<br />
Heckman, Lalonde and Smith (1999) noted that <strong>the</strong> major evaluations in <strong>the</strong> US have<br />
<strong>of</strong>ten focused on earnings ra<strong>the</strong>r than employment gains from programs. They concluded<br />
that <strong>the</strong> evidence from both <strong>the</strong> North American and European studies indicated only a<br />
modest gain in <strong>the</strong> probability <strong>of</strong> employment. However, it was found that many nonexperimental<br />
evaluations were lacking in <strong>the</strong>ir exploration <strong>of</strong> methodological issues, such<br />
as <strong>the</strong> appropriate choice <strong>of</strong> evaluation method. For both Friedlander et al. (1997) and<br />
Heckman et al. (1999) <strong>the</strong> overview encompassed an immense variety <strong>of</strong> programs, time<br />
periods and methods. As a result <strong>the</strong> conclusions are not specific, but instead <strong>the</strong>y provide<br />
an impression <strong>of</strong> <strong>the</strong> uncertainty that still remains as to <strong>the</strong> empirical effectiveness <strong>of</strong><br />
programs in achieving gains.<br />
Fay (1996) conducted a review <strong>of</strong> OECD active labour market program evidence,<br />
including wage subsidies to <strong>the</strong> private sector. Subsidies were concluded to be useful for<br />
long-term unemployed or women re-entrants, with this drawn mostly from <strong>the</strong> US JTPA-<br />
II-A experimental evidence. It was found impossible to harmonise <strong>the</strong> results for <strong>the</strong><br />
different outcome measures and means <strong>of</strong> achieving <strong>the</strong> evaluations and it was<br />
commented that robust evaluation results were scarce. In particular <strong>the</strong>y recommended it<br />
was important to make non-experimental evaluations more rigorous, and consideration<br />
made to testing alternative model specifications, toge<strong>the</strong>r with greater data collection<br />
(Fay (1996): 33).<br />
Marx (2001) reviews targeted employment/wage subsidies, for OECD countries mostly<br />
in Europe but also Australia. The conclusion is that little evidence exists for a beneficial<br />
effect on employment prospects, with a variety <strong>of</strong> negative impacts, limited impact size,<br />
and some few positive results.
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