Abstract
AbstractIn comparative studies, causal evaluations attempt to improve our understanding of the effectiveness of structural reforms by counterfactually inspecting post-treatment effects. Yet, even if comparative scholars find similar treatment and comparison units, the interpretation of the post-treatment trajectory is difficult as short-term estimates can be subject to strategic timing of reform implementation, while long-term effects are likely affected by further interventions. To illustrate these difficulties we apply the generalized synthetic control method to evaluate the introduction of a British national minimum wage. We find a short-term decreasing effect on youth unemployment that turns into an increasing effect over time. This suggests the presence of an upward biased selection effect from strategic timing. We also inspect two post-treatment interventions and find that they differ in their general and country-specific implications for the long-term trajectory.
Highlights
In comparative studies, causal evaluations attempt to improve our understanding of the effectiveness of structural reforms by counterfactually inspecting post-treatment effects
This result increases the confidence to associate differences in the post-treatment period to the reform implementation. With this confidence we can turn to the post-treatment trajectory in Figure 1, which suggests to distinguish three distinct post-treatment periods how youth unemployment in the “treated” United Kingdom (UK) with a national minimum wage (NMW) developed over time
Afterwards, the actual youth unemployment rate in the UK remains below the pre-treatment level until 2004.8 This short-term effect suggests that the implementation of the NMW has been a targeted action of policy-makers
Summary
Causal evaluations attempt to improve our understanding of the effectiveness of structural reforms by counterfactually inspecting post-treatment effects. Even if comparative scholars find similar treatment and comparison units, the interpretation of the post-treatment trajectory is difficult as short-term estimates can be subject to strategic timing of reform implementation, while long-term effects are likely affected by further interventions. To illustrate these difficulties we apply the generalized synthetic control method to evaluate the introduction of a British national minimum wage. Our recommendation is that comparative scholars assess the degree to which their estimates are subject to and affected by both general and country-specific post-treatment interventions
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