IDEAS home Printed from https://ideas.repec.org/p/ifs/ifsewp/06-08.html
   My bibliography  Save this paper

Dynamic models for policy evaluation

Author

Listed:
  • Costas Meghir

    (Institute for Fiscal Studies and Yale University)

Abstract

The evaluation of interventions has become a commonly used policy tool, which is frequently adopted to improve the transparency and effectiveness of public policy. However, evaluation methods based on comparing treatment and control groups in small scale trials are not capable of providing a complete picture of the likely effects of a policy and do not provide a framework which allows issues relating to the design of the programme to be addressed. The longer term effects relate to decisions by individuals to change aspects of their life-cycle behavior not directly targeted by the intervention, so as to best take into account of its presence. They also relate to possible changes in prices that may change or even reverse the incentives designed by the programme. In this paper we show how experimental data from field trials can be used to enhance the evaluation of interventions and we also illustrate the potential importance of allowing for longer term incentive and General Equilibrium effects.

Suggested Citation

  • Costas Meghir, 2006. "Dynamic models for policy evaluation," IFS Working Papers W06/08, Institute for Fiscal Studies.
    • Handle: RePEc:ifs:ifsewp:06/08
    as

    Download full text from publisher

    File URL: http://www.ifs.org.uk/wps/wp0608.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Alonso-Borrego, César & Fernández-Villaverde, Jesús & Galdon-Sanchez, Jose Enrique, 2004. "Evaluating Labor Market Reforms: A General Equilibrium Approach," IZA Discussion Papers 1129, Institute of Labor Economics (IZA).
    2. James Heckman & Lance Lochner & Ricardo Cossa, 2002. "Learning-By-Doing Vs. On-the-Job Training: Using Variation Induced by the EITC to Distinguish Between Models of Skill Formation," NBER Working Papers 9083, National Bureau of Economic Research, Inc.
    3. Richard Blundell & Martin Browning & Costas Meghir, 1994. "Consumer Demand and the Life-Cycle Allocation of Household Expenditures," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 61(1), pages 57-80.
    4. Petra Todd & Kenneth I. Wolpin, 2002. "Using a Social Experiment to Validate a Dynamic Behavioral Model of Child Schooling and Fertility: Assessing the Impact of a School Subsidy Program in Mexico," PIER Working Paper Archive 03-022, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania, revised 01 Sep 2003.
    5. Orazio P. Attanasio & Guglielmo Weber, 1993. "Consumption Growth, the Interest Rate and Aggregation," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 60(3), pages 631-649.
    6. Gianluca Violante & Giovanni Gallipoli & Costas Meghir, 2005. "Education Decisions, Equilibrium Policies and Wages Dispersion," 2005 Meeting Papers 522, Society for Economic Dynamics.
    7. Adda & Dustmann, 2004. "Career Progression and Formal versus on the Job Training," Econometric Society 2004 North American Winter Meetings 492, Econometric Society.
    8. Imbens, Guido W & Angrist, Joshua D, 1994. "Identification and Estimation of Local Average Treatment Effects," Econometrica, Econometric Society, vol. 62(2), pages 467-475, March.
    9. Richard Blundell & Ian Preston, 1998. "Consumption Inequality and Income Uncertainty," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 113(2), pages 603-640.
    10. Richard Blundell & Luigi Pistaferri & Ian Preston, 2008. "Consumption Inequality and Partial Insurance," American Economic Review, American Economic Association, vol. 98(5), pages 1887-1921, December.
    11. Costas Meghir & Luigi Pistaferri, 2004. "Income Variance Dynamics and Heterogeneity," Econometrica, Econometric Society, vol. 72(1), pages 1-32, January.
    12. James Heckman & Lance Lochner & Christopher Taber, 1998. "Explaining Rising Wage Inequality: Explanations With A Dynamic General Equilibrium Model of Labor Earnings With Heterogeneous Agents," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 1(1), pages 1-58, January.
    13. Lorraine Dearden & Carl Emmerson & Christine Frayne & Costas Meghir, 2005. "Education subsidies and school drop-out rates," IFS Working Papers W05/11, Institute for Fiscal Studies.
    14. Abowd, John M & Card, David, 1989. "On the Covariance Structure of Earnings and Hours Changes," Econometrica, Econometric Society, vol. 57(2), pages 411-445, March.
    15. Paul Schultz, T., 2004. "School subsidies for the poor: evaluating the Mexican Progresa poverty program," Journal of Development Economics, Elsevier, vol. 74(1), pages 199-250, June.
    16. Robert J. LaLonde, 1984. "Evaluating the Econometric Evaluations of Training Programs with Experimental Data," Working Papers 563, Princeton University, Department of Economics, Industrial Relations Section..
    17. Heckman, James & Singer, Burton, 1984. "A Method for Minimizing the Impact of Distributional Assumptions in Econometric Models for Duration Data," Econometrica, Econometric Society, vol. 52(2), pages 271-320, March.
    18. repec:pri:indrel:dsp011j92g746j is not listed on IDEAS
    19. MaCurdy, Thomas E, 1981. "An Empirical Model of Labor Supply in a Life-Cycle Setting," Journal of Political Economy, University of Chicago Press, vol. 89(6), pages 1059-1085, December.
    20. David Card & Dean R. Hyslop, 2005. "Estimating the Effects of a Time-Limited Earnings Subsidy for Welfare-Leavers," Econometrica, Econometric Society, vol. 73(6), pages 1723-1770, November.
    21. Heckman, James J. & Lalonde, Robert J. & Smith, Jeffrey A., 1999. "The economics and econometrics of active labor market programs," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 31, pages 1865-2097, Elsevier.
    22. LaLonde, Robert J, 1986. "Evaluating the Econometric Evaluations of Training Programs with Experimental Data," American Economic Review, American Economic Association, vol. 76(4), pages 604-620, September.
    23. James J. Heckman & Hidehiko Ichimura & Petra Todd, 1998. "Matching As An Econometric Evaluation Estimator," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 65(2), pages 261-294.
    24. Heckman, James J & Sedlacek, Guilherme, 1985. "Heterogeneity, Aggregation, and Market Wage Functions: An Empirical Model of Self-selection in the Labor Market," Journal of Political Economy, University of Chicago Press, vol. 93(6), pages 1077-1125, December.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Maria Casanova-Rivas, 2008. "Dynamic Complementarities: A Computational and Empirical Analysis of Couples' Retirement Decisions," 2008 Meeting Papers 1073, Society for Economic Dynamics.
    2. Stylianos Sakkas, 2018. "The macroeconomic implications of the European Social Fund: An impact assessment exercise using the RHOMOLO model," JRC Working Papers on Territorial Modelling and Analysis 2018-01, Joint Research Centre.
    3. Cahuc, Pierre & Le Barbanchon, Thomas, 2010. "Labor market policy evaluation in equilibrium: Some lessons of the job search and matching model," Labour Economics, Elsevier, vol. 17(1), pages 196-205, January.
    4. Pierre Cahuc & Bruno Crépon & Julien Guitard & Marc Gurgand, 2008. "Policy Evaluation in Equilibrium The Case of Job Searcg Counseling in France," Working Papers 2008-13, Center for Research in Economics and Statistics.
    5. Sebastian Galiani & Juan Pantano, 2021. "Structural Models: Inception and Frontier," NBER Working Papers 28698, National Bureau of Economic Research, Inc.
    6. Helena Skyt Nielsen & Juanna Schrøter Joensen, 2011. "More Successful because of Math: Combining a Natural Experiment and a Structural Dynamic Model to Explore the Underlying Channels," 2011 Meeting Papers 995, Society for Economic Dynamics.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. James J. Heckman, 2005. "Micro Data, Heterogeneity and the Evaluation of Public Policy Part 2," The American Economist, Sage Publications, vol. 49(1), pages 16-44, March.
    2. Guido W. Imbens & Jeffrey M. Wooldridge, 2009. "Recent Developments in the Econometrics of Program Evaluation," Journal of Economic Literature, American Economic Association, vol. 47(1), pages 5-86, March.
    3. Heckman, James J. & Lalonde, Robert J. & Smith, Jeffrey A., 1999. "The economics and econometrics of active labor market programs," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 31, pages 1865-2097, Elsevier.
    4. Gianluca Violante & Giovanni Gallipoli & Costas Meghir, 2005. "Education Decisions, Equilibrium Policies and Wages Dispersion," 2005 Meeting Papers 522, Society for Economic Dynamics.
    5. David Card & Pablo Ibarrarán & Ferdinando Regalia & David Rosas-Shady & Yuri Soares, 2011. "The Labor Market Impacts of Youth Training in the Dominican Republic," Journal of Labor Economics, University of Chicago Press, vol. 29(2), pages 267-300.
    6. Sebastian Galiani & Juan Pantano, 2021. "Structural Models: Inception and Frontier," NBER Working Papers 28698, National Bureau of Economic Research, Inc.
    7. Orazio Attanasio & Peter Levell & Hamish Low & Virginia Sánchez-Marcos, 2015. "Aggregating Elasticities: Intensive and Extensive Margins of Female Labour Supply," NBER Working Papers 21315, National Bureau of Economic Research, Inc.
    8. Richard K. Crump & V. Joseph Hotz & Guido W. Imbens & Oscar A. Mitnik, 2006. "Moving the Goalposts: Addressing Limited Overlap in the Estimation of Average Treatment Effects by Changing the Estimand," NBER Technical Working Papers 0330, National Bureau of Economic Research, Inc.
    9. Brant Abbott & Giovanni Gallipoli & Costas Meghir & Giovanni L. Violante, 2019. "Education Policy and Intergenerational Transfers in Equilibrium," Journal of Political Economy, University of Chicago Press, vol. 127(6), pages 2569-2624.
    10. Denis Fougère & Nicolas Jacquemet, 2020. "Policy Evaluation Using Causal Inference Methods," SciencePo Working papers Main hal-03455978, HAL.
    11. Duflo, Esther & Glennerster, Rachel & Kremer, Michael, 2008. "Using Randomization in Development Economics Research: A Toolkit," Handbook of Development Economics, in: T. Paul Schultz & John A. Strauss (ed.), Handbook of Development Economics, edition 1, volume 4, chapter 61, pages 3895-3962, Elsevier.
    12. Richard Blundell & Monica Costa Dias, 2009. "Alternative Approaches to Evaluation in Empirical Microeconomics," Journal of Human Resources, University of Wisconsin Press, vol. 44(3).
    13. Orazio P. Attanasio & Nicola Pavoni, 2011. "Risk Sharing in Private Information Models With Asset Accumulation: Explaining the Excess Smoothness of Consumption," Econometrica, Econometric Society, vol. 79(4), pages 1027-1068, July.
    14. Jones A.M & Rice N, 2009. "Econometric Evaluation of Health Policies," Health, Econometrics and Data Group (HEDG) Working Papers 09/09, HEDG, c/o Department of Economics, University of York.
    15. Sokbae Lee & Yoon-Jae Whang, 2009. "Nonparametric Tests of Conditional Treatment Effects," Cowles Foundation Discussion Papers 1740, Cowles Foundation for Research in Economics, Yale University.
    16. Michael Lechner, 2000. "An Evaluation of Public-Sector-Sponsored Continuous Vocational Training Programs in East Germany," Journal of Human Resources, University of Wisconsin Press, vol. 35(2), pages 347-375.
    17. Adda & Dustmann, 2004. "Career Progression and Formal versus on the Job Training," Econometric Society 2004 North American Winter Meetings 492, Econometric Society.
    18. Thomas Brodaty & Bruno Crépon & Denis Fougère, 2007. "Les méthodes micro-économétriques d'évaluation et leurs applications aux politiques actives de l'emploi," Economie & Prévision, La Documentation Française, vol. 0(1), pages 93-118.
    19. Jonathan Heathcote & Kjetil Storesletten & Giovanni L. Violante, 2009. "Quantitative Macroeconomics with Heterogeneous Households," Annual Review of Economics, Annual Reviews, vol. 1(1), pages 319-354, May.
    20. Hidehiko Ichimura & Christopher R. Taber, 2000. "Direct Estimation of Policy Impacts," NBER Technical Working Papers 0254, National Bureau of Economic Research, Inc.

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ifs:ifsewp:06/08. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Emma Hyman (email available below). General contact details of provider: https://edirc.repec.org/data/ifsssuk.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.