Programme Heterogeneity and Propensity Score Matching: An Application to the Evaluation of Active Labour Market Policies

Abstract

This paper investigates the question whether it really matters for microeconometric evaluation studies to take account of the fact that the programmes under consideration are heterogeneous. Assuming that selection into the different sub-programmes and the potential outcomes are independent given observable characteristics, estimators based on different propensity scores are compared and applied to the analysis of the active labour market policy in a Swiss region. Furthermore, the issues of heterogeneous effects and aggregation are addressed. The econometric considerations as well as the results of the application suggest that an approach that incorporates the possibility of having multiple programmes could be an important tool in applied work.

Keywords: Multiple programmes, programme evaluation, treatment effects, balancing score, matching

JEL Classification: C10, C50, J60, J68