Evaluating the Effect of Training on Wages in the Presence of Noncompliance, Nonemployment, and Missing Outcome Data

The effects of a job training program, Job Corps, on both employment and wages are evaluated using data from a randomized study. Principal stratification is used to address, simultaneously, the complications of noncompliance, wages that are only partially defined because of nonemployment, and unintended missing outcomes. The first two complications are of substantive interest, whereas the third is a nuisance. The objective is to find a parsimonious model that can be used to inform public policy. We conduct a likelihood-based analysis using finite mixture models estimated by the expectation-maximization (EM) algorithm. We maintain an exclusion restriction assumption for the effect of assignment on employment and wages for noncompliers, but not on missingness. We provide estimates under the “missing at random” assumption, and assess the robustness of our results to deviations from it. The plausibility of meaningful restrictions is investigated by means of scaled log-likelihood ratio statistics. This is a joint work with Paolo Frumento, Fabrizia Mealli, and Barbara Pacini.