Evaluation of the Australian Wage Subsidy Special Youth ...

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Matching methods are theoretically based upon the consideration of characteristics prior
to programme entry, and the definition of the comparison group used here flouts this
fundamental premise and would bias and generally invalidate these estimates. This is
because Stromback and Dockery (2000) argue that their comparison group definition
excludes the ‘lock-in’ period, where placements must be in subsidised employment until
the end of the subsidy, which the comparison group does not face. They also point out
that defining the comparison group at programme entry as matching methods require
would give the comparison group an employment rate nearly 3 times higher, and so
Jobstart would end up with a negative employment impact. However, this alludes to
choices made to achieve a desired positive employment impact rather than providing a
satisfactory reason for choosing this econometric strategy.
In June 1996 the new coalition government announced reductions for labour market
programme expenditures, and abolition of several programmes. However there was some
political confusion and substantial ambiguity about Jobstart expenditures and continuity,
with various conflicting announcements (OECD (2001): 201 –202). It eventuated that
Jobstart continued into 1997-98 but as a programme for the disabled, and was then
abolished in 1998/99. There is no wage subsidy programme that operates in Australia in
the current period.
2.1.4 Discussion
Australian evaluation evidence for wage subsidies is scant. The AWSS was not evaluated.
The GTA-OTJ was only evaluated alongside SYETP. 16 It could in any case be argued,
that the relevance of these subsidies is more limited than that of SYETP or Jobstart. Both
AWSS and GTA-OTJ were very small in scale, with very little expenditure and few
placements being made to these programmes. GTA-OTJ is very difficult to define clearly,
as it was so discretionary. However, as GTA-OTJ was only for ‘jobs-in-demand’ it was
not a general wage subsidy available to all employers. The later Jobstart evaluations
mostly took place after Jobstart had been changed from a general wage subsidy tiered by
age to a subsidy programme only for long-term unemployed and disadvantaged or
16 A critical review of these evaluations is given in the later section 2.3 of this chapter