Econometrics for Evaluations: An Introduction to Recent Developments

There has recently been a rapid expansion of interest in the econometrics of program evaluation, both within Australia and around the world. We provide a review of the key issues and recent developments in this field. A central feature of recent developments is the attempt to allow for program impacts that vary across individuals. This contrasts with earlier econometric approaches that implicitly assumed a homogeneous treatment effect. We survey alternative nonexperimental estimation strategies and note that they can be characterised by (1) an assumption about how untreated outcomes vary across individuals: this assumption in turn suggests how the counter-factual untreated outcomes of program participants should be estimated, and (2) the way in which the estimator aggregates or weights the program impacts of different individuals in the treatment group. We also emphasise the importance of good data.     

Assisting the Long-Term Unemployed: Results from a Randomised Trial

Welfare reform in Australia centres on both economic and social participation. The policy concern is that people who fail to participate in economic and social life may become entrenched in disadvantage. In 2000–2001, a randomised trial was conducted by the Department of Family and Community Services to assess whether an intensive interview with follow-ups would result in increased participation for long-term recipients of income support. Participation in the trial led to a reduction in average hours worked, but increased hours spent in study or training. We find evidence of increased social integration associated with participation in the trial.     

THE WEALTH AND ASSET HOLDINGS OF U.S.-BORN AND FOREIGN-BORN HOUSEHOLDS: EVIDENCE FROM SIPP DATA

SIPP data are used to analyze the wealth of the U.S. foreign-born population. We find that the median wealth level of U.S.-born couples is 2.5 times the median of foreign-born couples, while the median wealth level of U.S.-born singles is three times that of foreign-born singles. Further, there is a great deal of diversity in wealth within the immigrant population. Diversity in net worth manifests itself primarily in source-region differences, while entry-cohort is more closely related to portfolio choices. Established immigrants hold less and recent immigrants hold more financial wealth. An opposite pattern emerges with respect to real estate equity.     

The stability of big-five personality traits

We demonstrate that Big-Five personality traits are stable for working-age adults over a four-year period. Mean population changes are small and constant across age groups. Intra-individual changes are generally unrelated to adverse life events and are not economically meaningful.     

Noncognitive skills, occupational attainment, and relative wages

This paper examines whether men's and women's noncognitive skills influence their occupational attainment and, if so, whether this contributes to the disparity in their relative wages. We find that noncognitive skills have a substantial effect on the probability of employment in many, though not all, occupations in ways that differ by gender. Consequently, men and women with similar noncognitive skills enter occupations at very different rates. Women, however, have lower wages on average not because they work in different occupations than men do, but rather because they earn less than their male colleagues employed in the same occupation. On balance, women's noncognitive skills give them a slight wage advantage. Finally, we find that accounting for the endogeneity of occupational attainment more than halves the proportion of the overall gender wage gap that is unexplained.     

Leaving Home: What Economics Has to Say about the Living Arrangements of Young Australians

Like their counterparts elsewhere, more young Australians than ever are delaying the move to establish residential independence from their parents. This paper reviews the developing economics literature surrounding young people's decisions to continue living in their parents' homes in order to begin to assess the causes and consequences of this decision. In particular, co‐residence with parents appears to be an important form of intergenerational support for young adults. It is important to understand the extent to which young people rely on this form of support as they complete their education, enter the labour market and establish themselves as independent adults. Specific attention is paid to the ways in which Australian income support, education and housing policies may influence these patterns.     

The Longitudinal Survey of Immigrants to Australia

This article sets out the advantages and limitations of the Longitudinal Survey of Immigrants to Australia data for undertaking immigration research.