The Effect of Sanctions and Active Labour Market Programmes on the Exit Rate From Unemployment
AbstractThis paper simultaneously investigates the effectiveness of benefit sanctions and active labour market programmes on the exit rate from unemployment using Danish data. In the data about one third of the individuals who are sanctioned also participate in some active labour market programmes (ALMPs). Hence, modeling only one of them as treatment might over or underestimate the true effect. Therefore, by using a multivariate mixed proportional hazard model (MMPH), we model the hazard rate out of unemployment along with the sanction rate and hazard rate into active labour market programmes. We optimally select the number of supports point for the distribution of unobserved heterogeneity. Results show that pre-specifying two support points underestimates the effect of sanctions and active labour market programmes. Failing to control for selectivity for sanctions not only underestimates the treatment effect of sanctions but also biases the treatment effect of ALMPs.
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Bibliographic InfoPaper provided by School of Economics and Management, University of Aarhus in its series Economics Working Papers with number 2009-14.
Date of creation: 04 Dec 2009
Date of revision:
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Web page: http://www.econ.au.dk/afn/
competing risks; unemployment insurance; timing of events ; NPMLE; MMPH;
Find related papers by JEL classification:
- C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
- C15 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Statistical Simulation Methods: General
- C41 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Duration Analysis; Optimal Timing Strategies
- J64 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Unemployment: Models, Duration, Incidence, and Job Search
- J65 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Unemployment Insurance; Severance Pay; Plant Closings
- J68 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Public Policy
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-12-19 (All new papers)
- NEP-IAS-2009-12-19 (Insurance Economics)
- NEP-LAB-2009-12-19 (Labour Economics)
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