CAUSAL EFFECTS IN NON-EXPERIMENTAL STUDIES: LALONDE’S RESULTS

Posted by Kathryn Schwartz on April 18, 2014
CAUSAL EFFECTS IN NON-EXPERIMENTAL STUDIES:

The Data
The National Supported Work (NSW) Demonstration (see Manpower Demonstration Research Corporation 1983) was a federally-funded program implemented in the mid-1970s, with the objective of providing work experience for a period of 12 to 18 months to individuals who had faced economic and social problems prior to enrollment in the program. Those randomly selected to join the program participated in various types of work, ranging from operating a restaurant to construction work. Information on pre-intervention variables (pre-intervention earnings as well as education, age, ethnicity, and marital status) was obtained from initial surveys and Social Security Administration records.
In this paper we focus on the male participants, since estimates for this group were the most sensitive to functional-form specification, as indicated in Lalonde (1986). Both the treatment and control groups participated in follow-up interviews at specific intervals. The outcome variable of interest is post-intervention (1978) earnings. Unlike typical clinical trials, the eligible candidates did not join the NSW program immediately, but were randomized in over a period of 51 months between March 1975 and June 1977. This introduced what the administrators of the program have referred to as the “cohort phenomenon” (MDRC 1983, p. 48): individuals who joined early in the program had different characteristics than those who entered later.
Lalonde limits his sample to those assigned between January 1976 and July 1977 in order to achieve homogeneity within the treatment and control groups, reducing the sample to 297 treated observations and 425 control observations for male participants. His sample is limited to one year of pre-intervention earnings data (1975). Link

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