Why randomize? Job-training program and wages

Question

A city reports that residents who enrolled in a voluntary job-training program earn more a year later than those who did not enroll, and cites this as proof the program raises wages.

Explain why the earnings gap cannot establish that the program raises wages, and design an evaluation that can. Why is randomization essential?

Accepted Answer

Why the gap is not enough. Enrollment was voluntary, so the people who signed up differ from those who did not. The motivated, job-seeking, more employable residents are the ones who enroll and the ones who would earn more anyway. Motivation and employability are confounders driving both enrollment and wages, so the program looks effective even if it does nothing. This self-selection is exactly why naive before-after or enrolled-versus-not comparisons of training programs are unreliable. An evaluation that can prove causation. Among applicants who want the program, randomly admit some (treatm…

Why randomize? Job-training program and wages

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