Using administrative data sources in Labour Market research [pdf 5 ...

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Labour Market Labour Bulletin Market 2000–02 Bulletin Special 2000–02 Issue Special Pages 26–30 Issue
Using administrative data sources in labour market
research: an introduction
SYLVIA DIXON 1
NTERNATIONALLY, SOCIAL AND ECONOMIC RESEARCHERS are making
Iincreasing use of administrative data sources to investigate a wide range of
issues. A large amount of administrative data is routinely collected by
government agencies as the by-product of their administrative functions, and the
costs of accessing and utilising these data for research are usually quite low
compared with the costs of collecting new data. As statistical and computing tools
have improved, the number of empirical studies that analyse administrative data
has grown. Examples of the types of administrative data that have been used in
labour market research include social security payment or income support
records, unemployment registration records, income tax data, workers’ accident
insurance and compensation records, the enrolment records of educational
institutions and company personnel records.
This special issue of the Labour Market Bulletin features three articles that
illustrate the potential of administrative data sources for empirical research. Maria
Gobbi and David Rea analyse unemployment register data collected by the New
Zealand Employment Service (NZES) to investigate the duration of unemployment
spells and the distribution of unemployment across jobseekers. Dave Maré uses a
different selection of NZES data to examine the effects of active labour market
assistance programmes in influencing the subsequent unemployment experiences
of jobseekers. Dave Maré and Kerry Papps analyse data collected by the Occupational
Safety and Health Service (OSH) in order to evaluate the effectiveness of OSH
information and enforcement activities in reducing the number of workplace
accidents.
These studies illustrate the value of administrative data in policy or
programme evaluation research. Frequently, the administrative data that are
generated during the delivery of a social programme provide a rich source of
information on the participants and the services they receive, and are a key source
of information for the evaluation of the programme’s operation and effectiveness.
Typically, a universal sample of all participants in the programme is available,
and the information that is recorded on key aspects of programme participation,
such as the financial support or other assistance received, is fairly detailed and
1
Sylvia Dixon is a Research Advisor in the Labour Market Policy Group of the New
Zealand Department of Labour.
© 2002, Department of Labour, New Zealand, unless specified otherwise

Sylvia Dixon 27
accurate. The registered unemployment data analysed by Gobbi and Rea
contained information on everyone who registered as unemployed in the period
1993 to 1997, representing around 1.2 million individuals and 2.8 million distinct
spells of registration. The NZES data contain information on demographic
characteristics such as age, gender, ethnicity, educational attainment and place of
residence, as well as detailed information on registration history and employment
assistance received. The data analysed by Maré provide complete information on
all assistance that was provided to registered jobseekers over a nine-year period
(1989–97).
One of the most important properties of administrative datasets is that the
individuals or firms that interact with the administrative agency are usually
assigned unique identifiers. Consequently, the records relating to each unique
respondent can be accurately linked across time. This enables the creation of
datasets that include time-related and spell variables, such as the duration of time
that jobseekers spend unemployed, or the number of times a firm has been
investigated by OSH. The longitudinal nature of many administrative datasets also
enables researchers to apply panel data techniques in their modelling of outcomes
or policy effects, which can be useful in dealing with classic estimation problems
such as unmeasured heterogeneity among programme participants. Maré and
Papps use a range of different fixed effect specifications of their basic statistical
model in attempt to estimate the effects of OSH compliance assessments,
education, information and advice on the incidence of accidents, while controlling
for firm and industry heterogeneity.
A important disadvantage of administrative data sources is that the range of
variables collected on each individual or firm is often quite limited, hindering the
capacity of the researcher to explore all relevant hypotheses about the causes of
the relationship or outcome of interest, or control for potentially confounding
factors. For example, the OSH data analysed by Maré and Papps contained very
little information on the range of firm characteristics that may be associated with
differences in the level of hazards faced by firms, or differences in the costs of
preventing accidents. This central weakness in the data source limits the weight
that can be attached to the conclusions of their study. A key limitation of the
unemployment register data analysed in the other two studies is that very little
information is recorded on the activities and circumstances of those who leave the
register. This means that transitions from unemployment into employment cannot
be properly distinguished from less favourable outcomes, such as exit from the
labour market.
One response to the problem of omitted variables in administrative datasets is
to link them to other data sources. While the studies in this issue of the Labour
Market Bulletin do not involve any matching of data from different sources, other
New Zealand researchers are currently engaged in innovative projects that are
linking administrative with survey data to investigate problems that could not

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Labour Market Bulletin 2000–02 Special Issue
otherwise be adequately researched. For example, a team of researchers at the
Wellington School of Medicine, led by Tony Blakely, is studying socio-economic
variations in mortality patterns by linking census data on socio-economic factors
to individual mortality records (Blakely et al, 1999). Overseas experience indicates
that linking administrative data on key labour market outcomes such as
employment, annual taxable incomes or benefit payments to survey data on
individual or household characteristics can greatly extend the research potential
of the administrative data. Statistics New Zealand (1998) is a useful reference
source on the techniques of integrating administrative data and the potential costs
and benefits of integration exercises.
Because administrative datasets are compiled for operational reasons rather
than for research, and typically contain data that was keyed in by a large number
of people who are not data-entry specialists, deficiencies in data coverage and
quality are common. Administrative decisions can also cause discontinuities in the
concepts and populations that are measured. For example, changes in the jobsearch
obligations that different classes of beneficiary are required to meet have
led to changes over time in the size and composition of the registered
unemployed population. Data inconsistencies resulting from inconsistencies in the
application of questions, missing fields of data, inconsistencies in the coding of
responses, the duplication of records or identities, and inaccuracies in the linking
of records over time are common problems faced by researchers who are
analysing a particular administrative data source for the first time. The up-front
time required to identify and, where possible, resolve these data quality issues
before analysis can proceed is often quite large. Indeed, it is not uncommon for
researchers to spend more time assessing the quality of the data and attempting
to resolve inconsistencies than actually analysing it. At worst, major changes in
the data over time that were driven by administrative decisions can undermine
attempts to use the data to understand real world trends or identify the
behavioural effects of a policy change.
The increased use of administrative data in social and economic research is
prompting the agencies that compile such data to consider more carefully what
access and data protection rules should apply. Access to administrative data is
typically conditioned by the obligation of the data holder to protect the
confidentiality of the subjects on the one hand, but allow legitimate access for
research purposes on the other. The NZES and OSH data that are analysed in this
issue were collected by the Department of Labour, and Department of Labour
standards for the protection of administrative data collected internally have
evolved over time. Current practices limit research access to authorised
researchers, who must be employees of the Department and must have agreed to
observe a set of principles and procedures for protecting confidentiality. Records
are ‘confidentialised’ by the removal of identifying information such as names

Sylvia Dixon 29
and addresses. Data are stored on an isolated and secure data server, so that only
authorised people can view them. Confidentiality standards also require that
research outputs are screened and any information that might permit individuals
or firms to be identified is removed.
Other related research
For a broader view on the potential of administrative data for innovative labour
market research, a number of other recent New Zealand and Australian studies
can be consulted. Dean Hyslop has used longitudinally linked data from the
Inland Revenue Department’s tax database to analyse individual income mobility
(2000b) and to estimate the effects of receiving welfare benefits on individuals’
future incomes (2000a). Moira Wilson has used longitudinally linked data on
working-aged beneficiaries collected by the Department of Social Welfare (and
more recently the Department of Work and Income) to analyse the dynamics of
benefit receipt. Wilson (1999) investigates the duration patterns and rates of
return to income support that are associated with different types of benefit.
Wilson (2000) uses data on successive cohorts of Domestic Purposes Benefit (DPB)
beneficiaries to examine the extent to which patterns of DPB receipt were affected
by a series of policy changes that strengthened the incentives for DPB recipients to
undertake part-time work and increased their obligations to search for work.
Wilson’s work on the dynamics of benefit receipt is paralleled in Australia by
a number of studies commissioned recently by the Department of Family and
Community Services (Barrett, 2001; Flatau and Dockery, 2001; Strombeck and
Dockery, 2001). Using data extracted from the Department’s client and benefit
payment records, these studies examine the durations of time that different types
of recipient spend on different types of benefit (unemployment, sole parent
pension) and the factors that are associated with exit from the benefit system.
New Zealand Conference on Database Integration and Linked
Employer-Employee Data
To promote greater understanding of the techniques and potential benefits of
matching administrative and survey data across data sources, a group of New
Zealand government departments have jointly organised a conference on this
theme, which will take place in Wellington on 21–22 March 2002.
The Conference on Database Integration and Linked Employer-Employee Data
features a number of respected American researchers who have pioneered the
development of integrated employer-employee datasets, such as John Abowd and
John Haltiwanger. They will offer insights into their experiences. Other
international speakers will discuss methods for the preparation and linking of
administrative data and the practical lessons they have learned in data integration
projects. Several speakers will present papers on the confidentiality protection

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Labour Market Bulletin 2000–02 Special Issue
issues are that faced by agencies with ownership of important survey or
administrative datasets. A series of overseas and New Zealand-based researchers
who are currently engaged in data integration exercises will present results from
their work.
Further information about the conference is available at the conference
website, http://www.dileed.govt.nz. Leading papers from the conference will be
published in the New Zealand Economic Papers.
References
Barrett, Gary (2001) ‘The Dynamics of Participation in Parenting Payment (Single) and Sole Parent
Pension’, Department of Family and Community Services, Policy Research Paper No 14, Commonwealth
Government of Australia. Available at http://www.facs.gov.au.
Blakely, Tony; Salmond, Clare and Woodward, Alistair (1999) ‘Anonymous Record Linkage of
1991 Census Records and 1991–94 Mortality Records’, NZCMS Technical Report No 1, Department of
Public Health, Wellington School of Medicine.
Flatau, Paul and Dockery, Mike (2001) ‘How Do Income Support Recipients Engage with the
Labour Market?’, Department of Family and Community Services, Policy Research Paper No 12,
Commonwealth Government of Australia. Available at http://www.facs.gov.au.
Hyslop, Dean (2000a) ‘Does Benefit Receipt Affect Future Income? An econometric explanation’,
Treasury Working Paper No 2000/14. Available at http://www.treasury.govt.nz/workingpapers/.
Hyslop, Dean (2000b) ‘A Preliminary Analysis of the Dynamics of Individual Market and
Disposable Incomes’, Treasury Working Paper No 2000/15. Available at http://ww.treasury.govt.nz/
workingpapers/.
Statistics New Zealand (1998) Final Report on the Feasibility Study into the Costs and Benefits of
Integrating Cross-sectional Administrative Data to Produce New Social Statistics, Statistics New
Zealand, Wellington.
Strombeck, Thorsten and Dockery, Mike (2001) ‘The Duration of Unemployment Benefit Spells: A
comparison of indigenous and non-indigenous persons’, Department of Family and Community
Services, Policy Research Paper No 10, Commonwealth Government of Australia. Available at http://
www.facs.gov.au.
Wilson, Moira (1999) ‘The Duration of Benefit Receipt: New findings from the benefit dynamics
data set’, Social Policy Journal of New Zealand, Issue 13, pp 59–82.
Wilson, Moira (2000) ‘The Policy Response to the Employment Taskforce and Changing Patterns of
Domestic Purpose Benefit Receipt: A cohort analysis’, Social Policy Journal of New Zealand, Issue 14,
pp 78–103.