DP3298 Disentangling Treatment Effects of Polish Active Labour Market Policies: Evidence from Matched Samples

Author(s): Jochen Kluve , Hartmut Lehmann , Christoph M Schmidt

Publication Date: April 2002

Keyword(s): active labour market policy , transition , exact matching , propensity score , determinants of programme participation

JEL(s): C49 , J68

Programme Areas: Transition Economics

Link to this Page: www.cepr.org/pubs/dps/DP3298.asp

This Paper estimates causal effects of two Polish active labour market policies – Training and Intervention Works – on employment probabilities. Utilizing data from the 18th wave of the Polish Labor Force Survey we discuss three stages of an appropriately designed exact matching procedure. The approach is illustrated using the estimated propensity score as a summary measure of balance. Distributions of pre-treatment labour market status histories show the decisive relevance of employment indicators as determinants of programme participation – a point often ignored in evaluation research. We implement a conditional difference-in-differences estimator of treatment effects based on these individual trinomial sequences of pre-treatment labour market status. Our findings suggest that Training raises employment probability, while Intervention Works seems to lead to a negative treatment effect for men. Furthermore, we find that appropriate subdivision of the matched sample for conditional treatment effect estimation can add considerable insight to the interpretation of results.