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A Critical Survey of Empirical Methods for Evaluating Active Labor Market Policies

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This paper considers different methods for solving the evaluation problem. I highlight the role of heterogeneity in program impacts in defining evaluation parameters of interest and in interpreting estimated program impacts. I discuss the strengths and weaknesses of social experiments and conclude that they require careful implementation and interpretation. I review and critique two popular non-experimental evaluation methods: difference-in-differences and propensity score matching. I find that the former relies on assumptions at odds with the empirical data and that the latter is not a magical solution to all evaluation problems. Finally, I argue for the importance of paying attention to data quality and general equilibrium effects.
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  • Jeffrey Smith, 2000. "A Critical Survey of Empirical Methods for Evaluating Active Labor Market Policies," University of Western Ontario, Departmental Research Report Series 20006, University of Western Ontario, Department of Economics.
    • Handle: RePEc:uwo:uwowop:20006
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