By comparing experimental and propensity-score impact estimates of dropout prevention programs, we examine whether propensity-score methods produce unbiased estimates of program impacts. We find no consistent evidence that such methods replicate experimental impacts in our setting. This finding holds even when the data available for matching are extensive. Our findings suggest that evaluators who plan to use nonexperimental methods, such as propensity-score matching, need to consider carefully how programs recruit individuals and why individuals enter programs, as unobserved factors may exert powerful influences on outcomes that are not easily captured using nonexperimental methods. 2004 President and Fellows of Harvard College and the Massachusetts Institute of Technology.

This paper examines the relationship between unemployment durations and cyclical movements in unemployment using an "employment calendar" constructed from recent questions in the Panel Study of Income Dynamics. We find that unemployment durations increase with the unemployment rate with the strongest effects for individuals with the longest elapsed durations. Copyright 1990 by MIT Press.

This paper examines consumption changes of workers following experiences of unemployment in different stochastic environments. The model developed in the paper predicts that consumption changes following unemployment spells should be small for workers the higher are their layoff and recall probabilities. These predictions are confirmed in estimates with panel data.

In this paper we explore the role of transitory income in the housing purchase decision. Because of moral hazard considerations banks typically require downpayments to be financed internally, hence transitory income is potentially important in overcoming the downpayment constraint. Using a novel approach to the measurement of permanent and transitory income, we estimate a two-stage model in which households decide whether to purchase housing in the first stage and the quantity to be purchased in the second. The results indicate a significant role for transitory income in both decision stages.