Evaluation of the Australian Wage Subsidy Special Youth ...

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subsidies were not separately evaluated. Generally, the outcome of an empirical review
for wage subsidies is a paucity of results for which there are not mitigating caveats.
In conducting a review of the empirical wage subsidy literature, other questions arise.
Each empirical fact requires the bigger economic context to understand the operation. For
some programs, the evaluation outcome exists and the description of the program is
available yet the greater picture of the economy under which the outcome was achieved is
not readily available. The general economic context can help resolve which theoretical
modelling assumptions are appropriate to the outcome. To this end, Australian economic
detail for the period evaluated has been briefly summarized to augment the evaluation
evidence for the Australian wage subsidy SYETP.
The SYETP program operated between 1976 and 1985. While SYETP operation is
historical, information about the employment consequences of this program are of current
relevance for a number of reasons related to economic and econometric questions.
Re-evaluation of program data some time later has proved productive in the US
econometric literature. The first valuable result of reanalysis is to raise debate about the
methods applied. Potential flaws in past program evaluation can be rectified, and the
results re-assessed. The outcome can be useful, and often shed new light on the question
of how the program worked. In an influential study, Smith and Todd (2000), Smith and
Todd (2003) re-examined the program evaluation of Lalonde (1986), and found that a
substantial amount of bias and sensitivity in the results was due to the analytical choices
made, methods, poor data and covariate restrictions. In re-analysing, methods can then be
updated for techniques either not available or not chosen when the data were first
analysed. Dehija and Wahba (1998, 1999) reanalysed the Lalonde (1986) data using
propensity score matching, but selected only a subset of the data. Smith (2000) notes that
analysis by Smith and Todd (2000) show the very different results obtained by Dehija
and Wahba (1998, 1999) were strongly influenced by choice of covariates and analytical
selection of the data subset.