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

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  • van den Berg, Gerard J.

    (University of Groningen)

  • Vikström, Johan

    (IFAU)

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," IZA Discussion Papers 12470, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp12470
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    Cited by:

    1. Doerr, Annabelle, 2022. "Vocational training for female job returners - Effects on employment, earnings and job quality," Labour Economics, Elsevier, vol. 75(C).
    2. Cockx, Bart & Lechner, Michael & Bollens, Joost, 2023. "Priority to unemployed immigrants? A causal machine learning evaluation of training in Belgium," Labour Economics, Elsevier, vol. 80(C).
    3. Marco Caliendo & Robert Mahlstedt & Gerard J. van den Berg & Johan Vikström, 2023. "Side effects of labor market policies," Scandinavian Journal of Economics, Wiley Blackwell, vol. 125(2), pages 339-375, April.
    4. Anže Burger & Jochen Kluve & Milan Vodopivec & Matija Vodopivec, 2022. "A comprehensive impact evaluation of active labour market programmes in Slovenia," Empirical Economics, Springer, vol. 62(6), pages 3015-3039, June.
    5. Doerr, Annabelle, 2022. "Vocational Training for Female Job Returners - Effects on Employment, Earnings and Job Quality," Working papers 2022/02, Faculty of Business and Economics - University of Basel.

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    More about this item

    Keywords

    matching; duration analysis; program evaluation; dynamic treatment evaluation; treatment effects; unemployment; employment;
    All these keywords.

    JEL classification:

    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs

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