Evaluation of the Australian Wage Subsidy Special Youth ...

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Table of contents Table of contents.............................................................................................................. i List of Tables and Figures.............................................................................................. xi Glossary ....................................................................................................................... xiv Abstract......................................................................................................................... xv 1: Wage subsidy theory and evaluation .............................................................................. 1 1.1 Structure of this research .......................................................................................... 1 1.1 General introduction ................................................................................................. 2 1.2 Brief summary of the theory of wage subsidies........................................................ 7 1.3 Introduction to evaluation of programs................................................................... 16 1.3.1 Evaluation of programs........................................................................ 17 1.3.2 Evaluation problem.............................................................................. 18 1.3.3 Selection............................................................................................... 20 1.3.4 Observables and unobservables ........................................................... 22 1.4 Brief comment on recent overseas evidence of wage subsidy evaluations ............ 23 2: Australian literature review .......................................................................................... 28 2.1 Review of Australian wage subsidy evaluation evidence....................................... 30 2.1.1 Adult Wage Subsidy Scheme............................................................... 31 2.1.2 ‘General Training Assistance On-the-Job-Training’ ........................... 33 2.1.3 Jobstart ................................................................................................. 34 2.1.4 Discussion............................................................................................ 41 2.2 SYETP implementation .......................................................................................... 43 2.2.1 Historical development of SYETP........................................................... 43 2.2.2 An overview of SYETP changes ............................................................. 48 2.2.3 SYETP operation ..................................................................................... 51 2.2.4 Political environment of SYETP ............................................................. 55 2.2.5 Economic Context of SYETP at the time of our analysis........................ 58 2.2.5.1 Role and impact of the CES.............................................................. 58 2.2.5.2 Unemployment in the Australian economy over the 1980’s ............ 62 2.2.5.3 Discussion......................................................................................... 69 2.2.6 Context of SYETP environment and operation ....................................... 70 2.2.6.1 General results for SYETP using other approaches.......................... 70 2.2.6.2 Job characteristics ............................................................................. 71 2.2.6.3 Characteristics of SYETP commencements ..................................... 72 2.2.6.4 Factors affecting completion of subsidy placement.......................... 77 2.3 Critical Review of Evaluation of SYETP ............................................................... 78 2.3.1 Stretton (1982, 1984) .......................................................................... 79 2.3.2 Baker (1984) ........................................................................................ 81 2.3.3 Rao and Jones (1986)........................................................................... 84 2.3.4 Richardson (1998)................................................................................ 87 2.3.5 General discussion ............................................................................... 91 3: Study 1 Replication....................................................................................................... 94 3.1 Motivation for replication....................................................................................... 94 3.2 Methods: The Heckman selection model................................................................ 95 3.2.1 Self-selection and the evaluation of programmes................................ 95 3.2.2 The estimated model............................................................................ 96 viii
3.3 Data and variables used for estimation ................................................................... 99 3.4 Replication results................................................................................................. 101 3.5 Discussion............................................................................................................. 103 4: Study 2 Propensity score matching for SYETP.......................................................... 111 4.1 Differences between the treatment and comparison group................................... 112 4.2 Propensity score matching methods...................................................................... 115 4.3 Theory underlying propensity score matching methods....................................... 116 4.4 The propensity score matching protocol implemented......................................... 119 4.5 Estimating the probability of participation for SYETP ........................................ 122 4.6 Distribution of the propensity score...................................................................... 127 4.7 Common support for the treated ........................................................................... 128 4.8 Results of Matching: one-to-one nearest-neighbour............................................. 132 4.8.1 Discussion of the results .................................................................... 132 4.8.2 Mean standardised bias statistic......................................................... 136 4.9 Sensitivity analysis: all-in-Radius matching......................................................... 139 4.10 Discussion........................................................................................................... 141 5: Study 3 Attrition and non-response in the ALS.......................................................... 145 5.1 Examining sample reduction in the ALS.............................................................. 145 5.2 Theory of why attrition introduces bias................................................................ 146 5.3 Empirical aspects of the effects of attrition on estimates ..................................... 149 5.4 Empirical attrition test and treatment.................................................................... 150 5.5 Examining the role of attrition in the ALS and in modelling of the SYETP employment effect ...................................................................................................... 152 5.5.1 Extent of sample reduction .................................................................... 152 5.5.2 Univariate examination of sample reduction ......................................... 155 5.5.3 Sample reduction by SYETP treatment group....................................... 160 5.5.3.1 Comparing those lost in attrition to those who remain................... 160 5.5.3.2 The effect of sample reduction on the difference between SYETP and comparison groups...................................................................................... 164 5.5.4 Attrition: natural attrition or analytical sample reduction?.................... 167 5.6 Accounting for non-response and sample design ................................................. 172 5.6.1 Survey design and non-response effects on modelling.......................... 176 5.6.1.1 Analytical selection......................................................................... 176 5.6.1.2 Effects of the non-response to 1984 Survey on the participation model........................................................................................................... 183 5.7 Multivariate analysis of effects of sample reduction ............................................ 187 5.7.1 Accounting for item non-response......................................................... 187 5.7.2 Sample reduction effects on model of SYETP participation................. 189 5.8 Model of the probability of attrition ..................................................................... 192 5.9 Attrition Weights from the model......................................................................... 196 5.10 Conclusions......................................................................................................... 196 6: Study 4 Weighting to counteract attrition and non-response in ALS......................... 199 6.1 Results of weighting Heckman bivariate probit.................................................... 199 6.2 Results of weighting the PSM............................................................................... 207 6.2.1 Weighting protocol ................................................................................ 207 6.2.2 Effects of weighting PSM...................................................................... 208 ix
Page 1: i Evaluation of the Australian Wage
Page 5 and 6: v Declaration I hereby declare that
Page 7: in method and assumptions. The orth
Page 11 and 12: List of Tables and Figures Figure 1
Page 13 and 14: Table A2.0b Univariate Probit of pa
Page 15 and 16: xv Abstract The job subsidy Special
Page 17 and 18: 1 1: Wage subsidy theory and evalua
Page 19 and 20: 3 programs of providing benefits an
Page 21 and 22: 5 The empirical methods used for th
Page 23 and 24: 7 how the outcomes from these metho
Page 25 and 26: 9 employment effect could be mainly
Page 27 and 28: 11 Real Wage Employment Figure 1.1:
Page 29 and 30: 13 are two types of unemployment, s
Page 31 and 32: 15 Real wages are predetermined whe
Page 33 and 34: 17 Vella (1998), Heckman, Lalonde a
Page 35 and 36: 19 Each individual has two potentia
Page 37 and 38: 21 this case, if there was no data
Page 39 and 40: 23 correlation for the error of the
Page 41 and 42: 25 Table 1.3 collects together some
Page 43 and 44: 27 Table 1.3 Brief overview of rece
Page 45 and 46: 29 necessarily brief. Then, the evi
Page 47 and 48: 31 limited applications, such as fo
Page 49 and 50: 33 who participated. It was conclud
Page 51 and 52: 35 term unemployed for over 12 of t
Page 53 and 54: 37 importance of the subsidy second
Page 55 and 56: 39 differences in characteristics t
Page 57 and 58: 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
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201 Table 6.1, part A Employment eq
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203 Methodist 0.133 0.261 (0.77) (1
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205 CEP referrals 1984 0.143* 0.128
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207 6.2 Results of weighting the PS
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209 The distribution of the propens
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211 Table 6.3 Weighted probit used
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213 (0.76) Tradesperson mtrad 0.20
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215 Table 6.5 Summary statistics fo
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217 Table 6.7 Matching results, sin
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219 6.3 Discussion The comparison o
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221 the selection into SYETP and th
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223 Heteroskedasticity is a violati
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225 Table 7.1, Part A Employment eq
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227 (1.26) (1.28) (1.16) Mothers oc
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229 Other Post-School qualification
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231 7.1.2 Exclusion restriction in
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233 Finally, the third panel of new
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235 Table 7.2 summary of changes to
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237 schooling that was statisticall
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239 (0.25) (0.21) 3 years + -0.50 -
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241 Table 7.4 Summary of distributi
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243 7.2.2 Propensity score matching
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245 original model, but with the pe
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247 maintained, then the Heckman bi
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249 Table 7.6 Weighted Probit used
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251 Table 7.7 Summary of distributi
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253 8: Summary and Conclusions The
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255 over which it ran, the review m
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257 the Heckman and PSM methods wer
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259 posited that that such sensitiv
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261 Description Derivation and deta
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Appendix 2 Tables 263
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2 years 0.28 0.07 (1.70) (1.70) 3 y
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267 Table A2.0b Univariate Probit o
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269 Religion brought up in (1.52) (
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271 hq9_84 Year 9 of school or less
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273 Table A2.1 Continued Means and
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275 mtrad Tradesperson 0.04 0.04 0.
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277 Year 9 of school or less -0.19
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279 Table A2.3 Probit of SYETP part
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281 (0.22) (0.44) (0.67) (0.89) Tra
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283 Table A2.5a Univariate probit f
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285 Manager/professional/para-profe
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3 years + -0.04 (2.13)* CEP referra
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289 Table A2.6 Part A Employment eq
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291 Table A2.6 Part B Selection/par
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Page 311 and 312:
Page 313 and 314:
Page 315 and 316:
Page 317 and 318:
301
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BLMR Bureau of Labour Market Resear
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Fay, R.G. (1996) "Enhancing the eff
Page 323 and 324:
Heckman J.J. and Smith, J. A. (1998
Page 325 and 326:
Lewis, H.G. (1963) "Unionism and re
Page 327 and 328:
Quandt, R. (1972) "A new approach t
Page 329 and 330:
Stromback, M. and Dockery, A. (2000
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