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Duration dependence versus unobserved heterogeneity in treatment effects: Swedish labor market training and the transition rate to employment

Author

Listed:
  • Richardson, Katarina

    (Swedish Ministry of Finance)

  • van den Berg, Gerard J

    (Department of Economics, VU University Amsterdam)

Abstract
The vocational employment training program is the most expensive training program in Sweden and a cornerstone of labor market policy. We analyze its causal effects on the individual transition rate from unemployment to employment by exploiting variation in the timing of treatment and outcome, dealing with selectivity on unobservables. We demonstrate the appropriateness of this approach in our context by studying the enrollment process. We develop a model allowing for duration dependence and unobserved heterogeneity (leading to spurious duration dependence) in the treatment effect itself, and we prove non-parametric identification. The data cover the population and include multiple unemployment spells for many individuals. The results indicate a large significantly positive effect on exit to work shortly after exiting the program. The effect at the inidividual level diminishes after some weeks. When taking account of the time spent in the program, the effect on the mean unemployment duration is small.

Suggested Citation

  • Richardson, Katarina & van den Berg, Gerard J, 2008. "Duration dependence versus unobserved heterogeneity in treatment effects: Swedish labor market training and the transition rate to employment," Working Paper Series 2008:7, IFAU - Institute for Evaluation of Labour Market and Education Policy.
    • Handle: RePEc:hhs:ifauwp:2008_007
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    References listed on IDEAS

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    8. Brännäs, Kurt, 2000. "Estimation in a Duration Model for Evaluating Educational Programs," Umeå Economic Studies 521, Umeå University, Department of Economics.
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    12. James J. Heckman & Christopher R. Taber, 1994. "Econometric Mixture Models and More General Models for Unobservables in Duration Analysis," NBER Technical Working Papers 0157, National Bureau of Economic Research, Inc.
    13. Heckman, James J. & Lalonde, Robert J. & Smith, Jeffrey A., 1999. "The economics and econometrics of active labor market programs," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 31, pages 1865-2097, Elsevier.
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    Citations

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    Cited by:

    1. Bruno Crépon & Marc Ferracci & Grégory Jolivet & Gerard J. van den Berg, 2009. "Active Labor Market Policy Effects in a Dynamic Setting," Journal of the European Economic Association, MIT Press, vol. 7(2-3), pages 595-605, 04-05.
    2. B. Cockx & C. Goebel & S. Robin, 2009. "Is income support for part-time workers a steppingstone to regular jobs? An application to young long-term unemployed women," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 09/561, Ghent University, Faculty of Economics and Business Administration.
    3. Sebastian Butschek & Thomas Walter, 2014. "What active labour market programmes work for immigrants in Europe? A meta-analysis of the evaluation literature," IZA Journal of Migration and Development, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 3(1), pages 1-18, December.
    4. Bart Cockx & Christian Goebel & Stéphane Robin, 2013. "Can income support for part-time workers serve as a stepping-stone to regular jobs? An application to young long-term unemployed women," Empirical Economics, Springer, vol. 44(1), pages 189-229, February.
    5. Mroz, T. & Picone, G., 2011. "A Multiple State Duration Model with Endogenous Treatment," Health, Econometrics and Data Group (HEDG) Working Papers 11/19, HEDG, c/o Department of Economics, University of York.
    6. Bergemann, Annette & van den Berg, Gerard J., 2008. "From Giving Birth to Paid Labor: The Effects of Adult Education for Prime-Aged Mothers," IZA Discussion Papers 3600, Institute of Labor Economics (IZA).
    7. Walter, Thomas & Butschek, Sebastian, 2013. "What Active Labour Market Programmes Work for Immigrants in Europe?," VfS Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79745, Verein für Socialpolitik / German Economic Association.
    8. Thomas A. Mroz & Gabriel Picone & Frank Sloan & Arseniy P. Yashkin, 2016. "Screening For A Chronic Disease: A Multiple Stage Duration Model With Partial Observability," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 57(3), pages 915-934, August.
    9. Gaure, Simen & Røed, Knut & van den Berg, Gerard J. & Zhang, Tao, 2010. "Estimation of Heterogeneous Treatment Effects on Hazard Rates," IZA Discussion Papers 4794, Institute of Labor Economics (IZA).
    10. Jonas Staghøj & Michael Svarer & Michael Rosholm, 2010. "Choosing the Best Training Programme: Is there a Case for Statistical Treatment Rules?," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 72(2), pages 172-201, April.
    11. Qureshi, Atef, 2013. "The Effect of Punitive Sanctions on the Transition Rate from Welfare to Work: Evidence from Denmark," Nationaløkonomisk tidsskrift, Nationaløkonomisk Forening, vol. 2013(2), pages 225-246.

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    More about this item

    Keywords

    Vocational training; progam evaluation; duration analysis; selectivity bias; dynamic treatments; active labor policy; identification;
    All these keywords.

    JEL classification:

    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • C41 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Duration Analysis; Optimal Timing Strategies
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

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