Sensitivity of Matching-Based Program Evaluations to the Availability of Control Variables

50 Pages Posted: 24 Mar 2011

See all articles by Michael Lechner

Michael Lechner

University of St. Gallen - Swiss Institute for Empirical Economic Research

Conny Wunsch

University of Basel; IZA Institute of Labor Economics; CESifo (Center for Economic Studies and Ifo Institute); University of St. Gallen

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Date Written: March 17, 2011

Abstract

Based on new, exceptionally informative and large German linked employer-employee administrative data, we investigate the question whether the omission of important control variables in matching estimation leads to biased impact estimates of typical active labour market programs for the unemployed. Such biases would lead to false policy conclusions about the cost-effectiveness of these expensive policies. Using newly developed Empirical Monte Carlo Study methods, we find that besides standard personal characteristics, information on individual health and firm characteristics of the last employer are particularly important for selection correction. Moreover, it is important to account for past performance on the labour market in a very detailed and flexible way. Information on job search behaviour, timing of unemployment and program start, as well as detailed regional characteristics are also relevant.

Keywords: training, job search assistance, matching estimation, active labour market policies

JEL Classification: J680

Suggested Citation

Lechner, Michael and Wunsch, Conny, Sensitivity of Matching-Based Program Evaluations to the Availability of Control Variables (March 17, 2011). CESifo Working Paper Series No. 3381, Available at SSRN: https://ssrn.com/abstract=1788866

Michael Lechner (Contact Author)

University of St. Gallen - Swiss Institute for Empirical Economic Research ( email )

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St. Gallen, 9000
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Conny Wunsch

University of Basel ( email )

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Basel, CH-4003
Switzerland

IZA Institute of Labor Economics ( email )

P.O. Box 7240
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CESifo (Center for Economic Studies and Ifo Institute) ( email )

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University of St. Gallen ( email )

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St. Gallen, 9000
Switzerland

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