A Simple Approach to Treatment Effects on Durations When the Treatment Timing is Chosen
AbstractWhen a treatment unambiguously defines the treatment and control groups at a given time point, its effects are usually found by comparing the two groups' mean responses. But there are many cases where the treatment timing is chosen, for which the conventional approach fails. This paper sets up an ideal causal framework for such cases to propose a simple gamma-mixed proportional-hazard approach with three durations: the waiting time until treatment, the untreated duration from the baseline, and the treated duration from the treatment timing. To implement the proposal, we use semiparametric piecewise-constant hazards as well as Weibull hazards with a multiplicative gamma unobserved heterogeneity affecting all three durations. Despite the three durations interwoven in complex ways, surprisingly simple closed-form likelihoods are obtained whose maximization converges well. The estimators are applied to the same data as used by Fredriksson and Johansson (2008) for employment subsidy effects on unemployment duration to find about 11.1 month reduction.
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Bibliographic InfoPaper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 7249.
Length: 34 pages
Date of creation: Feb 2013
Date of revision:
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Find related papers by JEL classification:
- 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
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-03-23 (All new papers)
- NEP-ECM-2013-03-23 (Econometrics)
- NEP-HEA-2013-03-23 (Health Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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