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Duration dependence versus unobserved heterogeneity in treatment effects: Swedish labor market training and the transition rate to employment


  • Richardson, Katarina

    (Swedish Ministry of Finance)

  • van den Berg, Gerard J

    () (Department of Economics, VU University Amsterdam)


The vocational employment training program is the most expensive training program in Sweden and a cornerstone of labor market policy. We analyze its causal effects on the individual transition rate from unemployment to employment by exploiting variation in the timing of treatment and outcome, dealing with selectivity on unobservables. We demonstrate the appropriateness of this approach in our context by studying the enrollment process. We develop a model allowing for duration dependence and unobserved heterogeneity (leading to spurious duration dependence) in the treatment effect itself, and we prove non-parametric identification. The data cover the population and include multiple unemployment spells for many individuals. The results indicate a large significantly positive effect on exit to work shortly after exiting the program. The effect at the inidividual level diminishes after some weeks. When taking account of the time spent in the program, the effect on the mean unemployment duration is small.

Suggested Citation

  • Richardson, Katarina & van den Berg, Gerard J, 2008. "Duration dependence versus unobserved heterogeneity in treatment effects: Swedish labor market training and the transition rate to employment," Working Paper Series 2008:7, IFAU - Institute for Evaluation of Labour Market and Education Policy.
  • Handle: RePEc:hhs:ifauwp:2008_007

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    References listed on IDEAS

    1. Jaap H. Abbring & Gerard J. van den Berg, 2004. "Analyzing the effect of dynamically assigned treatments using duration models, binary treatment models, and panel data models," Empirical Economics, Springer, vol. 29(1), pages 5-20, January.
    2. James Albrecht & Gerard van den Berg & Susan Vroman, 2009. "The Aggregate Labor Market Effects of the Swedish Knowledge Lift Program," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 12(1), pages 129-146, January.
    3. Carling, Kenneth & Edin, Per-Anders & Harkman, Anders & Holmlund, Bertil, 1996. "Unemployment duration, unemployment benefits, and labor market programs in Sweden," Journal of Public Economics, Elsevier, vol. 59(3), pages 313-334, March.
    4. Geert Ridder, 1990. "The Non-Parametric Identification of Generalized Accelerated Failure-Time Models," Review of Economic Studies, Oxford University Press, vol. 57(2), pages 167-181.
    5. Edin, P-A. & Holmlund, B., 1990. "Unemployment, Vacancies And Labour Market Programmes: Swedish Evidence," Papers 1990j, Uppsala - Working Paper Series.
    6. Regner, Hakan, 2002. "A nonexperimental evaluation of training programs for the unemployed in Sweden," Labour Economics, Elsevier, vol. 9(2), pages 187-206, April.
    7. Matz Dahlberg & Anders Forslund, 2005. "Direct Displacement Effects of Labour Market Programmes," Scandinavian Journal of Economics, Wiley Blackwell, vol. 107(3), pages 475-494, September.
    8. Van den Berg, Gerard J., 2001. "Duration models: specification, identification and multiple durations," Handbook of Econometrics,in: J.J. Heckman & E.E. Leamer (ed.), Handbook of Econometrics, edition 1, volume 5, chapter 55, pages 3381-3460 Elsevier.
    9. Ridder, Geert & Tunali, Insan, 1999. "Stratified partial likelihood estimation," Journal of Econometrics, Elsevier, vol. 92(2), pages 193-232, October.
    10. James J. Heckman & Christopher R. Taber, 1994. "Econometric Mixture Models and More General Models for Unobservables in Duration Analysis," NBER Technical Working Papers 0157, National Bureau of Economic Research, Inc.
    11. Heckman, James J. & Lalonde, Robert J. & Smith, Jeffrey A., 1999. "The economics and econometrics of active labor market programs," Handbook of Labor Economics,in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 31, pages 1865-2097 Elsevier.
    12. Brännäs, Kurt, 2000. "Estimation in a Duration Model for Evaluating Educational Programs," IZA Discussion Papers 103, Institute for the Study of Labor (IZA).
    13. Jaap H. Abbring & Gerard J. van den Berg, 2003. "The Nonparametric Identification of Treatment Effects in Duration Models," Econometrica, Econometric Society, vol. 71(5), pages 1491-1517, September.
    14. Robert G. Fay, 1996. "Enhancing the Effectiveness of Active Labour Market Policies: Evidence from Programme Evaluations in OECD Countries," OECD Labour Market and Social Policy Occasional Papers 18, OECD Publishing.
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    Cited by:

    1. Bergemann, Annette & van den Berg, Gerard J., 2008. "From Giving Birth to Paid Labor: The Effects of Adult Education for Prime-Aged Mothers," IZA Discussion Papers 3600, Institute for the Study of Labor (IZA).
    2. Bruno Crépon & Marc Ferracci & Grégory Jolivet & Gerard J. van den Berg, 2009. "Active Labor Market Policy Effects in a Dynamic Setting," Journal of the European Economic Association, MIT Press, vol. 7(2-3), pages 595-605, 04-05.
    3. Gaure, Simen & Røed, Knut & van den Berg, Gerard J. & Zhang, Tao, 2010. "Estimation of Heterogeneous Treatment Effects on Hazard Rates," IZA Discussion Papers 4794, Institute for the Study of Labor (IZA).
    4. Jonas Staghøj & Michael Svarer & Michael Rosholm, 2010. "Choosing the Best Training Programme: Is there a Case for Statistical Treatment Rules?," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 72(2), pages 172-201, April.

    More about this item


    Vocational training; progam evaluation; duration analysis; selectivity bias; dynamic treatments; active labor policy; identification;

    JEL classification:

    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • 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
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

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