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The effects of youth employment: Evidence from New York City lotteries. (Gelber et al. 2016)

Citation

Gelber, A., Isen, A., & Kessler, J. B. (2016). The effects of youth employment: Evidence from New York City lotteries. The Quarterly Journal of Economics, 131(1), 423-460.

Highlights

  • The study’s objective was to examine the impact of the Summer Youth Employment Program (SYEP) on the employment rate, earnings, and college enrollment of New York City youth 14 to 21 years old.
  • The authors compared the employment rate, earnings, and college enrollment of the treatment group, youth who won a random lottery for the SYEP program and chose to participate in it, with those of the control group, youth who applied to the program but were not randomly selected to participate. The study used data from the Internal Revenue Service to measure outcomes over a five-year period.
  • The study found that, compared with earnings of the control group, the treatment group had significantly higher earnings in the year of participation in SYEP, but significantly lower earnings in the following three years. The treatment group also had a significantly higher probability of being employed in any job during the year of participation in SYEP and the first follow-up year compared with the employment probability of the control group.
  • The quality of causal evidence presented in this report is high because it was based on a well-implemented randomized controlled trial. This means we are confident that the estimated effects are attributable to the SYEP program, and not to other factors.

Intervention Examined

Summer Youth Employment Program (SYEP)

Features of the Intervention

The New York City Department of Youth and Community Development runs SYEP, which provides seven weeks of paid summer employment for youth 14 to 21 years old. It is the largest summer employment program in the United States and is available to all New York City youth who can provide the necessary documentation. Youth apply through a SYEP community-based organization provider, typically the one located closest to their home, and can only apply to one provider each year. Because more youth apply to the program than there are available summer jobs, SYEP uses a lottery to randomly select youth who will be offered the opportunity to participate in the program. Not all applicants selected by the lottery chose to participate in SYEP. In this case, SYEP continues to randomly select applicants until all the summer job placements fill up.

Features of the Study

A random lottery determined eligibility for participation in the SYEP program. The authors assessed the impact of the SYEP intervention on earnings, employment, and college enrollment for those that participated in the program, compared with those of youth who were not randomly selected to participate in the program. The authors used winning the SYEP lottery to statistically identify program participants using an approach called instrumental variables estimation that preserves the random assignment. They accounted for the difference between providers and the number of applicants in each year in their analysis. In the authors’ analysis, the impact estimates can be interpreted as the effect of participation in SYEP rather than the effect of winning a SYEP lottery.

The authors collected SYEP administrative data from the Department of Youth and Community Development and Internal Revenue Service records for those who applied to SYEP in each of the years from 2005 to 2008. The study measured their outcomes during the year of the program plus four follow-up years. The sample included 164,641 youth in the treatment group and 129,459 in the control group. The average age of youth in the study was 16.5 years old, and just less than half of the sample was male. About half of the sample were African American youth, 27 percent were Latino, and 13 percent were white. For the study sample, the average household income in the year before the program was $39,526.

Findings

  • Employment. The study found that program participation significantly increased the likelihood of employment in any job (SYEP or otherwise) by 71 percentage points during the year of participation in SYEP and 1 percentage point in the following year, compared with that of those in the control group. There were no significant differences between the treatment and control groups in the second, third, and fourth years after SYEP participation.
  • Earnings. Compared with the control group, the treatment group earned $876 more in the year of participation, but approximately $100 less in each of the three years following SYEP participation. These findings were all statistically significant. In the fourth year after SYEP participation, there were no significant differences in the total earnings of the treatment and control group.
  • Educational attainment. There were no significant differences between those who participated in SYEP and those who did not in terms of college enrollment.

Considerations for Interpreting the Findings

Youth were included in the sample for every year they applied to the SYEP program, even if they applied multiple times during the study period. For example, a particular youth applied for the program in the first study year, but was not selected in the lottery for that summer. For that year, the youth was a member of the control group. However, that same youth could apply again for the program in the subsequent summer, and if they won the lottery and chose to participate in the second year, then the youth would be part of the treatment group for that year. In total, the sample included 294,100 observations, which represented 198,454 people. The authors did not attempt to account for other characteristics of youth that might also have impacted the outcomes in the analysis (for example, individual fixed effects are not included); therefore, it is possible that the precision of the estimated effects of the SYEP program may be overstated.

Causal Evidence Rating

The quality of causal evidence presented in this report is high because it was based on a well-implemented randomized controlled trial. This means we are confident that the estimated effects are attributable to the SYEP program, and not to other factors.

Additional Sources

Gelber, A., Isen, A., & Kessler, J. B. (2014). The effects of youth employment: Evidence from New York City summer youth employment program lotteries. Unpublished manuscript.

Reviewed by CLEAR

April 2017