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Exploiting regional treatment intensity for the evaluation of labour market policies

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  • Markus Frölich
  • Michael Lechner

Abstract

We estimate the effects of active labour market policies (ALMP) on subsequent employment by nonparametric instrumental variables and matching estimators. Very informative administrative Swiss data with detailed regional information are combined with exogenous regional variation in programme participation probabilities, which generate an instrument within well-defined local labour markets. This allows pursuing instrumental variable as well as matching estimation strategies. A specific combination of those methods identifies a new type of effect heterogeneity. We find that ALMP increases individual employment probabilities by about 15% in the short term for unemployed that may be called 'marginal' participants. The effects seem to be considerably smaller for those unemployed not marginal to the participation decision.

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Bibliographic Info

Paper provided by Centre for Microdata Methods and Practice, Institute for Fiscal Studies in its series CeMMAP working papers with number CWP11/06.

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Date of creation: Jun 2006
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Handle: RePEc:ifs:cemmap:11/06

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Keywords: local average treatment effect; conditional local IV; active labour market policy; state borders; geographic variation; Switzerland; Fuller estimator;

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Citations

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Cited by:
  1. Stephen G. Donald & Yu-Chin Hsu & Robert P. Lieli, 2010. "Inverse Propensity Score Weighted Estimation of Local Average Treatment Effects and a Test of the Unconfoundedness Assumption," CEU Working Papers 2012_9, Department of Economics, Central European University, revised 11 Aug 2010.
  2. Lechner, Michael & Wunsch, Conny, 2006. "Are Training Programs More Effective When Unemployment Is High?," IZA Discussion Papers 2355, Institute for the Study of Labor (IZA).
  3. Christian Volpe Martincus & Jerónimo Carballo, 2010. "Entering New Country and Product Markets: Does Export Promotion Help?," IDB Publications 36738, Inter-American Development Bank.
  4. Stefanie Behncke & Markus Frölich & Michael Lechner, 2006. "Aktive Arbeitsmarktpolitik in Deutschland und der Schweiz - eine Gegenüberstellung," University of St. Gallen Department of Economics working paper series 2006 2006-13, Department of Economics, University of St. Gallen.
  5. Michael Lechner, 2007. "A Note on the Relation of Weighting and Matching Estimators," University of St. Gallen Department of Economics working paper series 2007 2007-34, Department of Economics, University of St. Gallen.
  6. Ham, John C. & Li, Xianghong & Reagan, Patricia B., 2011. "Matching and semi-parametric IV estimation, a distance-based measure of migration, and the wages of young men," Journal of Econometrics, Elsevier, vol. 161(2), pages 208-227, April.
  7. Tamini, Lota D., 2009. "Agri-Environment Advisory Activities Effects on Best Management Practices Adoption," MPRA Paper 18961, University Library of Munich, Germany.

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