Monday, August 29, 2016

1st September 2016: An Application (or Two) of the Synthetic Control Method (SCM) in Policy Evaluation

Devesh Roy
IFPRI, New Delhi

We estimate the impact of the Hartz Reforms, the most prominent labor reforms in Germany since the Second World War, on the German labor market. We adopt a cross-country program evaluation approach where, employing Synthetic Control Method (SCM) for comparative case studies, we utilize the characteristics of OECD countries to construct a counterfactual for Germany. We find that while the reforms did not impact the overall unemployment rates they did increase temporary employment. We trace this result to elevated labor force participation with accompanying composition effect that channeled the increased number of participants to temporary employment.

SCM is tailor made for situations where there is one – or a handful of – treated units compared against a large number of control units. SCM also has specific advantages when the heterogeneities across comparison units are substantive and important.

We have used SCM in a number of policy evaluation cases that fits this description. We studied changes in sources of insurance coverage due to the 2006 Massachusetts health reform, which is the precursor to the Affordable Health Care reform, or popularly known as Obamacare.

Exploring the variation among U.S. states we have looked into the possible causes of income inequality: in one paper we examined if the Right-to-work Laws that passed in four U.S. states over the last five decades contributed to the rising inequality. In another paper, a work-in-progress, we test the impact of minimum wage hike on inequality.

We have employed SCM on issues of international trade and development. We have investigated the impact of NAFTA on regional CO2 emissions, impacts of the TRIPS agreement on the pharmaceutical industry in India – international trade, in particular.  We are also studying the impact of grid separation – a novel electricity distribution policy – in Gujarat, India, on outcomes related to agriculture and leakages in distribution.

Date: September 1, 2015
Time: 03:00 P.M.

Seminar Room (First Floor)
Department of Economics,
Delhi School of Economics,
New Delhi-110007(INDIA)


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