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Long-Run Effects of Dynamically Assigned Treatments: a New Methodology and an Evaluation of Training Effects on Earnings

Author

Listed:
  • van den Berg, Gerard J.

    () (University of Bristol)

  • Vikström, Johan

    () (IFAU - Institute for Evaluation of Labour Market and Education Policy)

Abstract

We propose and implement a new method to estimate treatment effects in settings where individuals need to be in a certain state (e.g. unemployment) to be eligible for a treatment,treatments may commence at different points in time, and the outcome of interest is realized after the individual left the initial state. An example concerns the effect of training on earnings in subsequent employment. Any evaluation needs to take into account that some of those who are not trained at a certain time in unemployment will leave unemployment before training while others will be trained later. We are interested in effects of the treatment at a certain elapsed duration compared to “no treatment at any subsequent duration”. We prove identification under unconfoundedness and propose inverse probability weighting estimators. A key feature is that weights given to outcome observations of non-treated depend on the remaining time in the initial state. We study earnings effects of WIA training in the US and long-run effects of a training program for unemployed workers in Sweden. Estimates are positive and sizeable, exceeding those obtained by using common static methods, and suggesting a reappraisal of training.

Suggested Citation

  • van den Berg, Gerard J. & Vikström, Johan, 2019. "Long-Run Effects of Dynamically Assigned Treatments: a New Methodology and an Evaluation of Training Effects on Earnings," Working Paper Series 2019:18, IFAU - Institute for Evaluation of Labour Market and Education Policy.
  • Handle: RePEc:hhs:ifauwp:2019_018
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    File URL: https://www.ifau.se/globalassets/pdf/se/2019/wp-2019-18-long-run-effects-of-dynamically-assigned-treatments.pdf
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    References listed on IDEAS

    as
    1. Andersson, Fredrik & Holzer, Harry J. & Lane, Julia & Rosenblum, David & Smith, Jeffrey A., 2013. "Does Federally-Funded Job Training Work? Nonexperimental Estimates of WIA Training Impacts Using Longitudinal Data on Workers and Firms," IZA Discussion Papers 7621, Institute of Labor Economics (IZA).
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    Cited by:

    1. Bart Cockx & Michael Lechner & Joost Bollens, 2019. "Priority to unemployed immigrants? A causal machine learning evaluation of training in Belgium," Papers 1912.12864, arXiv.org.

    More about this item

    Keywords

    Treatment effects; dynamic treatment evaluation; program evaluation; duration analysis; matching; unemployment; employment.;

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity

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