Alternative Approaches to the Evaluation of Public Policy Interventions with an Emphasis on Policies Designed to Foster Human Capital

National Opinion Research Center, Chicago IL

Investigators

Abstract

The goal of this research is to develop an approach to policy evaluation that combines the best features of the structural and treatment effects approach, by putting more economics into the treatment effects approach and at the same time producing a more robust statistical approach to structural policy evaluation. A latent variable modeling framework is used to formulate and estimate structural models and reduce the dimensionality of the estimation problem in conducting nonparametric analyses of treatment effects. The research represents an extension of previous work by the investigators, and the goal is to produce an economically interpretable earnings function that can be used to evaluate alternative public policies designed to foster human capital. The earnings function is also nested within a dynamic general equilibrium model of earnings, schooling, and capital formation.