How can one evaluate whether a government labour market programme such as the New Deal, or a subsidy to education such as the EMA is actually working? This course deals with the econometric and statistical tools that have been developed to estimate the causal impact on one or more outcomes of interest of any generic ‘intervention’ in the presence of selection decisions by agents – from government programmes, policies or reforms, to the returns to education, the impact of unionism on wages, or of migration on the labour market. After highlighting the ‘evaluation problem’ and the challenges it poses to the analyst, we focus on the empirical methods to solve it.
For each of these approaches, we give the basic intuition, discuss the assumptions needed for its validity, highlight the question it answers, discuss its strengths and weaknesses drawing from example applications in the literature and implement it ‘hands-on’ in practical Stata sessions.
Level of knowledge required: basic statistical concepts (e.g. significance testing) and basic econometric tools like OLS regression and probit/logit models. The practical part of the course will make use of Stata; although the exercises will be guided, basic familiarity with this software is strongly recommended. *Please note* that while offering an in-depth and thorough overview and discussion of the various evaluation methods, this is not an advanced course at the post-graduate level. Most emphasis is devoted to understanding the issues, to the choice of the most appropriate method for a given context and to the implementation of evaluation methods in practice.