Seminar Vol. 174

Title: Understanding Program Complementarities: Estimating the Dynamic Effects of a Training Program with Multiple Alternatives

Speaker: Kai Liu, University of Cambridge

Time: August 23rd, 13:30-15:00

Venue: Conference Room 106B, Zhonghui Building (IESR, JNU College of Economics)

About the speaker:

Kai Liu joins University of Cambridge as a University Lecturer in Economics, where he is an Assistant Professor. He received his Ph.D. in economics from Johns Hopkins in 2011. His research areas are Labor Economics, Public Economics, Applied Microeconometrics, Economics of China. His papers have been accepted and published on the  Journal of Labor Economics, Quantitative Economics, Journal of Health Economics,  Journal of Comparative Economics,  Journal of Development Economics and so on.

Abstract:

In this paper we estimate the causal effect of a training program for disadvantaged youths on their subsequent earnings. Individuals receive lottery offers to participate in the program, but are allowed to choose when to leave the program and to participate alternative programs when not enrolled in the program. We consider a multi-stage decision setting, where individuals sequentially select which program to participate at every stage. The standard Wald estimator using initial random assignment as instrumental variable identifies a weighted average of the effects of the treatment for subgroups of individuals differing in terms of potential duration of participation and choice of the alternative programs. We build a sequential choice model which allows us to separately estimate the effect of the treatment for these different subgroups. We use the estimated model to investigate the dynamic complementarity between participation of different training programs and explore potential avenues to improve the cost-effectiveness of the existing program.