Two-Step Cluster Randomization Design
RCTReview
Standard individual-level randomized controlled trials fail to detect market-wide spillover and displacement effects because untreated control units interact with treated units in the same local job market [1, 2]. A two-step cluster randomization design is required to isolate individual treatment gains from market-wide displacement effects by varying treatment saturation across geographical areas [1, 3, 4].
Picture this
Imagine playing a game of musical chairs in a room where shoes with springs are given to half the players. Those with spring shoes grab chairs faster than their barefoot room peers, but because the total number of chairs stays identical, the barefoot players end up without seats. To discover whether the shoes actually create extra chairs or merely swap who gets seated, one must compare a room where some people received spring shoes against a completely separate room where nobody received spring shoes.
What the evidence says
While individuals offered counseling were 2.5 percentage points more likely to find long-term employment after eight months than untreated peers in the same communities, untreated peers in treated communities were 2.1 percentage points less likely to find jobs than job seekers in pure comparison communities where 0% were treated [6, 7].
- Who was studied
- Nearly 30,000 young, college-educated human job seekers in their mid-twenties possessing at least a two-year degree and unemployed for at least six months across 235 communities in ten regions of France [5].
- How
- Randomized controlled trial using a two-step cluster randomization design conducted from 2007 to 2010, where local communities were first randomly assigned a treatment saturation level (0%, 25%, 50%, 75%, or 100%) and eligible individuals within treated communities were then randomly assigned to treatment or comparison groups [3-5].
What to do
Design active labor market evaluations using a two-step cluster randomization framework that varies treatment saturation across distinct local market clusters to measure spillover effects [2-4].
From the source
"The evaluation used a two-step randomization approach: first, randomly assigning the proportion of job seekers who would receive intensive counseling in a given community, and then randomly assigning job seekers in each treated community into the treatment or comparison group." [3]
briefcase_job-placement-and-displacement.pdf