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Training, Wages, and Sample Selection: Estimating Sharp Bounds on Treatment Effects

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  • David S. Lee

Abstract

This paper empirically assesses the wage effects of the Job Corps program, one of the largest federally-funded job training programs in the United States. Even with the aid of a randomized experiment, the impact of a training program on wages is difficult to study because of sample selection, a pervasive problem in applied micro-econometric research. Wage rates are only observed for those who are employed, and employment status itself may be affected by the training program. This paper develops an intuitive trimming procedure for bounding average treatment effects in the presence of sample selection. In contrast to existing methods, the procedure requires neither exclusion restrictions nor a bounded support for the outcome of interest. Identification results, estimators, and their asymptotic distribution, are presented. The bounds suggest that the program raised wages, consistent with the notion that the Job Corps raises earnings by increasing human capital, rather than solely through encouraging work. The estimator is generally applicable to typical treatment evaluation problems in which there is non-random sample selection/attrition.

Suggested Citation

  • David S. Lee, 2005. "Training, Wages, and Sample Selection: Estimating Sharp Bounds on Treatment Effects," NBER Working Papers 11721, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:11721
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    1. Angrist, Joshua D., 1997. "Conditional independence in sample selection models," Economics Letters, Elsevier, vol. 54(2), pages 103-112, February.
    2. David S. Lee, 2002. "Trimming for Bounds on Treatment Effects with Missing Outcomes," NBER Technical Working Papers 0277, National Bureau of Economic Research, Inc.
    3. John Burghardt & Peter Z. Schochet & Sheena McConnell & Terry Johnson & R. Mark Gritz & Steven Glazerman & John Homrighausen & Russell Jackson, "undated". "Does Job Corps Work? Summary of the National Job Corps Study," Mathematica Policy Research Reports 3d00dc5e556f4bdd88335dd90, Mathematica Policy Research.
    4. Newey, Whitney K. & McFadden, Daniel, 1986. "Large sample estimation and hypothesis testing," Handbook of Econometrics,in: R. F. Engle & D. McFadden (ed.), Handbook of Econometrics, edition 1, volume 4, chapter 36, pages 2111-2245 Elsevier.
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    6. Imbens, Guido W & Angrist, Joshua D, 1994. "Identification and Estimation of Local Average Treatment Effects," Econometrica, Econometric Society, vol. 62(2), pages 467-475, March.
    7. Guido W. Imbens & Charles F. Manski, 2004. "Confidence Intervals for Partially Identified Parameters," Econometrica, Econometric Society, vol. 72(6), pages 1845-1857, November.
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    9. John P Martin, 1998. "What Works Among Active Labour Market Policies: Evidence from OECD Countries' Experiences," RBA Annual Conference Volume,in: Guy Debelle & Jeff Borland (ed.), Unemployment and the Australian Labour Market Reserve Bank of Australia.
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    11. Card, David, 1999. "The causal effect of education on earnings," Handbook of Labor Economics,in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 30, pages 1801-1863 Elsevier.
    12. Ahn, Hyungtaik & Powell, James L., 1993. "Semiparametric estimation of censored selection models with a nonparametric selection mechanism," Journal of Econometrics, Elsevier, vol. 58(1-2), pages 3-29, July.
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    15. repec:mpr:mprres:2952 is not listed on IDEAS
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    Cited by:

    1. Sarah Baird & Ephraim Chirwa & Craig McIntosh & Berk Ozler, 2009. "The Short-Term Impacts of as Schooling Cash Transfer Program on the Sexual Behavior of Young Women," Working Papers 2010-10, The George Washington University, Institute for International Economic Policy.
    2. Florian Hoffmann & Philip Oreopoulos, 2009. "A Professor Like Me: The Influence of Instructor Gender on College Achievement," Journal of Human Resources, University of Wisconsin Press, vol. 44(2).
    3. Brunello, Giorgio & Comi, Simona & Sonedda, Daniela, 2010. "Training Subsidies and the Wage Returns to Continuing Vocational Training: Evidence from Italian Regions," IZA Discussion Papers 4861, Institute for the Study of Labor (IZA).
    4. Justin McCrary & Heather Royer, 2011. "The Effect of Female Education on Fertility and Infant Health: Evidence from School Entry Policies Using Exact Date of Birth," American Economic Review, American Economic Association, vol. 101(1), pages 158-195, February.
    5. Robert W. Fairlie & Florian Hoffmann & Philip Oreopoulos, 2014. "A Community College Instructor Like Me: Race and Ethnicity Interactions in the Classroom," American Economic Review, American Economic Association, vol. 104(8), pages 2567-2591, August.
    6. Christopher Blattman & Jeannie Annan, 2010. "The Consequences of Child Soldiering," The Review of Economics and Statistics, MIT Press, vol. 92(4), pages 882-898, November.
    7. Suresh de Mel & David McKenzie & Christopher Woodruff, 2009. "Returns to Capital in Microenterprises: Evidence from a Field Experiment," The Quarterly Journal of Economics, Oxford University Press, vol. 124(1), pages 423-423.
    8. Michael Lechner & Blaise Melly, 2007. "Earnings Effects of Training Programs," University of St. Gallen Department of Economics working paper series 2007 2007-28, Department of Economics, University of St. Gallen.
    9. Andrea Cegolon, 2015. "Determinants and Learning Effects of Adult Education-Training: a Cross-National Comparison Using PIAAC Data," DoQSS Working Papers 15-11, Department of Quantitative Social Science - UCL Institute of Education, University College London.
    10. KAWAGUCHI Daiji & NAITO Hisahiro, 2006. "The Bound Estimate of the Gender Wage Convergence under Employment Compositional Change," ESRI Discussion paper series 161, Economic and Social Research Institute (ESRI).
    11. Quintini, Glenda & Martin, John P. & Martin, Sébastien, 2007. "The Changing Nature of the School-to-Work Transition Process in OECD Countries," IZA Discussion Papers 2582, Institute for the Study of Labor (IZA).
    12. World Demographic and Ageing Forum & Glenda Quintini & John P. Martin & Sébastien Martin, 2007. "The changing nature of the school-to-work transition process in OECD countries," Journal Article y:2007:i:1, World Demographic and Ageing Forum.
    13. Florence Kondylis & Valerie Mueller, 2014. "Economic consequences of conflict and environmental displacement," Chapters,in: International Handbook on Migration and Economic Development, chapter 14, pages 388-424 Edward Elgar Publishing.

    More about this item

    JEL classification:

    • J0 - Labor and Demographic Economics - - General
    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
    • C1 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General
    • C2 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables
    • C5 - Mathematical and Quantitative Methods - - Econometric Modeling

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