Evaluation of the Australian Wage Subsidy Special Youth ...

70
Many of the labour market features described here would form part of the model
assumptions in theoretically ascribing a role for a youth wage subsidy. There were
minimum wages, which would give institutionalised inefficiency of the labour market.
Other factors, which have been reviewed here, would also have 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. 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 to
determine whether these features were caused by SYETP, or were merely the backdrop
influencing SYETP operation. Further consideration of the macro-economic environment
is beyond the remit of this analysis.
2.2.6 Context of SYETP environment and operation
A brief exposition of useful research about the operation of SYETP is included as
informative of the nature of SYETP close to the time of our analysis. The research
included here is relevant to SYETP but was not an evaluation of employment, or used
employer data, or was not based on micro-economic evaluation of individual data.
2.2.6.1 General results for SYETP using other approaches
Hoy and Paterson (1983) and the NEAT evaluation (BLMR (1984)) provide early BLMR
analysis with data for the years from 1977 to 1980. Unfortunately, SYETP operation
cannot be distinguished from other programmes and so this is not further discussed.
Smith (1984b) conducted a macro-econometric analysis of SYETP, where administrative
data for SYETP participants was related to aggregate unemployment survey measures for
youth’s unemployment and duration. The chief aim was to relate the number of subsidy
placements to variations in youth unemployment over time. The result for estimates were
compared to employer survey estimates, and the summary is shown in Table 2.13. The