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Regional Treatment Intensity as an Instrument for the Evaluation of Labour Market Policies

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  • Fröhlich, Markus
  • Lechner, Michael

Abstract

The effects of active labour market policies (ALMP) on individual employment chances and earnings are evaluated by non-parametric instrumental variables based on Swiss administrative data with detailed regional information. Using an exogenous variation in the participation probabilities across fairly autonomous regional units (cantons) generated by the federal government, we identify the effects of ALMP by comparing individuals living in the same local labour market but in different cantons. Taking account of small sample problems occurring in IV estimation, our results suggest that ALMP increases individual employment probabilities by about 10% in the short term for a weighted subpopulation of compliers.

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  • Fröhlich, Markus & Lechner, Michael, 2004. "Regional Treatment Intensity as an Instrument for the Evaluation of Labour Market Policies," CEPR Discussion Papers 4304, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:4304
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    Cited by:

    1. Ammermüller, Andreas & Zwick, Thomas & Boockmann, Bernhard & Maier, Michael, 2007. "Do hiring subsidies reduce unemployment among the elderly? Evidence from two natural experiments," ZEW Discussion Papers 07-001, ZEW - Leibniz Centre for European Economic Research.
    2. Paul Frijters & Robert Gregory, 2006. "From Golden Age to Golden Age: Australia's ‘Great Leap Forward’?," The Economic Record, The Economic Society of Australia, vol. 82(257), pages 207-224, June.
    3. Brian Krogh Graversen & Peter Jensen, 2010. "A Reappraisal of the Virtues of Private Sector Employment Programmes," Scandinavian Journal of Economics, Wiley Blackwell, vol. 112(3), pages 546-569, September.
    4. Beatrix Brügger & Rafael Lalive & Josef Zweimüller, 2009. "Does Culture Affect Unemployment? Evidence from the Röstigraben," CESifo Working Paper Series 2714, CESifo.
    5. Lagerström, Jonas, 2011. "How important are caseworkers – and why? New evidence from Swedish employment offices," Working Paper Series 2011:10, IFAU - Institute for Evaluation of Labour Market and Education Policy.

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    More about this item

    Keywords

    active labour market policy; fuller estimator; geographic variation; local average treatment effect; small sample problems of IV; state borders; switzerland; weak instruments;
    All these keywords.

    JEL classification:

    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • J68 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Public Policy

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