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The Analysis of Transition Data by the Minimum Chi-Square Method. An Application to Welfare Spells in Belgium

Author

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  • Cockx, Bart

    (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES))

Abstract

In this paper we analyse transition data by means of the minimum chi-square (MCS) method in stead of the more commonly used maximum likelihood (ML) method. The method requires a very large dataset with relatively little information on determining factors. If such data are available, the MCS method is to be the estimation procedure of choice, because it is more robust than the ML method and it has a lower mean square error for small sample sizes. The latter property is shown to be particularly relevant if one is interested in the estimation of the tail of the duration distribution. The analysis includes exists to multiple destinations and unmeasured heterogeneity. In the empirical application turnover in the welfare system is found to be very high in Belgium. Median duration is 4.5 months for men and 7 months for women. These figures overstate turnover in that exits out of welfare include those occurring as a consequence of recipients moving to another municipality while remaining on welfare.

Suggested Citation

  • Cockx, Bart, 1990. "The Analysis of Transition Data by the Minimum Chi-Square Method. An Application to Welfare Spells in Belgium," LIDAM Discussion Papers IRES 1995008, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES), revised 00 Mar 1995.
    • Handle: RePEc:ctl:louvir:1995008
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    Cited by:

    1. Guell, Maia & Hu, Luojia, 2006. "Estimating the probability of leaving unemployment using uncompleted spells from repeated cross-section data," Journal of Econometrics, Elsevier, vol. 133(1), pages 307-341, July.
    2. Muriel Dejemeppe & Yves Saks, 2002. "A New Light into Regional Unemployment Disparities in Belgium : Longitudinal Analysis of Grouped Duration Data," LIDAM Discussion Papers IRES 2002019, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    3. V. Vandenberghe, 2000. "Leaving Teaching in the French-Speaking Community of Belgium: A Duration Analysis," Education Economics, Taylor & Francis Journals, vol. 8(3), pages 221-239.
    4. Bart Cockx & Matteo Picchio, 2012. "Are Short-lived Jobs Stepping Stones to Long-Lasting Jobs?," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 74(5), pages 646-675, October.
    5. 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.
    6. Cockx, Bart & Bardoulat, Isabelle, 1999. "Vocational Training: Does it speed up the Transition Rate out of Unemployment ?," LIDAM Discussion Papers IRES 1999032, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    7. Muriel Dejemeppe, 2005. "A Complete Decomposition of Unemployment Dynamics using Longitudinal Grouped Duration Data," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 67(1), pages 47-70, February.
    8. Michael White and Genevieve Knight, 2003. "Benchmarking the effectiveness of NDYP: A review of European and US literature on the microeconomic effects of labour market programmes for young people," PSI Research Discussion Series 10, Policy Studies Institute, UK.
    9. Vandenberghe Vincent, 2003. "Leaving teaching in the French-Speaking Community of Belgium: a duration analysis," Public Economics 0308003, University Library of Munich, Germany.
    10. Bart Cockx & Muriel Dejemeppe, 2005. "Duration dependence in the exit rate out of unemployment in Belgium. Is it true or spurious?," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 20(1), pages 1-23, January.
    11. Cockx, Bart & Ridder, Geert, 2001. "Social Employment of Welfare Recipients in Belgium: An Evaluation," Economic Journal, Royal Economic Society, vol. 111(470), pages 322-352, April.
    12. Maes, Marjan, 2008. "Poverty persistence among Belgian elderly: true or spurious?," ISER Working Paper Series 2008-24, Institute for Social and Economic Research.
    13. John T. Addison & Pedro Portugal, 2003. "Unemployment Duration Competing and Defective Risks," Journal of Human Resources, University of Wisconsin Press, vol. 38(1).
    14. Vandenberghe Vincent, 2003. "Leaving teaching in the French-Speaking Community of Belgium: a duration analysis," Public Economics 0308001, University Library of Munich, Germany, revised 21 Aug 2003.
    15. Marjan, MAES, 2008. "Poverty persistence among Belgian elderly in the transition from work to retirement : an empirical analysis," Discussion Papers (ECON - Département des Sciences Economiques) 2008042, Université catholique de Louvain, Département des Sciences Economiques.
    16. Cockx, Bart & Brasseur, Carine, 2003. "The demand for physician services: Evidence from a natural experiment," Journal of Health Economics, Elsevier, vol. 22(6), pages 881-913, November.
    17. Maia Guell & Luojia Hu, 2003. "Estimating the Probability of Leaving Unemployment Using Uncompleted Spells from Repeated Cross-section Data," Working Papers 854, Princeton University, Department of Economics, Industrial Relations Section..

    More about this item

    Keywords

    duration analysis; provision and effects of welfare programs;

    JEL classification:

    • C41 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Duration Analysis; Optimal Timing Strategies
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs

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