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Exploiting Regional Treatment Intensity for the Evaluation of Labour Market Policies

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  • Frölich, Markus

    () (University of Mannheim)

  • Lechner, Michael

    () (University of St. Gallen)

Abstract

We estimate the effects of active labour market policies (ALMP) on subsequent employment by nonparametric instrumental variables and matching estimators. Very informative administrative Swiss data with detailed regional information are combined with exogenous regional variation in programme participation probabilities, which generate an instrument within well-defined local labour markets. This allows pursuing instrumental variable as well as matching estimation strategies. A specific combination of those methods identifies a new type of effect heterogeneity. We find that ALMP increases individual employment probabilities by about 15% in the short term for unemployed that may be called 'marginal' participants. The effects seem to be considerably smaller for those unemployed not marginal to the participation decision.

Suggested Citation

  • Frölich, Markus & Lechner, Michael, 2006. "Exploiting Regional Treatment Intensity for the Evaluation of Labour Market Policies," IZA Discussion Papers 2144, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp2144
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    References listed on IDEAS

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    Cited by:

    1. Lechner, Michael & Scioch, Patrycja & Wunsch, Conny, 2013. "Do Firms Benefit from Active Labour Market Policies?," Working papers 2013/11, Faculty of Business and Economics - University of Basel.
    2. Liebert, Helge, 2015. "Medical Screening and Award Errors in Disability Insurance," Annual Conference 2015 (Muenster): Economic Development - Theory and Policy 113224, Verein für Socialpolitik / German Economic Association.
    3. Tiago Cavalcanti & Daniel Da Mata & Frederik Toscani, 2014. "Winning the Oil Lottery: The Impact of Natural Resource Extraction on Growth," ERSA conference papers ersa14p109, European Regional Science Association.
    4. Michael Lechner & Conny Wunsch, 2009. "Are Training Programs More Effective When Unemployment Is High?," Journal of Labor Economics, University of Chicago Press, vol. 27(4), pages 653-692, October.
    5. Fitzenberger, Bernd & Furdas, Marina & Sajons, Christoph, 2016. "End-of-year spending and the long-run employment effects of training programs for the unemployed," Freiburg Discussion Papers on Constitutional Economics 16/08, Walter Eucken Institut e.V..
    6. Stephen G. Donald & Yu-Chin Hsu & Robert P. Lieli, 2010. "Inverse Propensity Score Weighted Estimation of Local Average Treatment Effects and a Test of the Unconfoundedness Assumption," CEU Working Papers 2012_9, Department of Economics, Central European University, revised 11 Aug 2010.
    7. Felfe, Christina & Lechner, Michael & Thiemann, Petra, 2016. "After-school care and parents' labor supply," Labour Economics, Elsevier, vol. 42(C), pages 64-75.
    8. Lechner, Michael & Wunsch, Conny, 2013. "Sensitivity of matching-based program evaluations to the availability of control variables," Labour Economics, Elsevier, vol. 21(C), pages 111-121.
    9. Tamini, Lota D., 2009. "Agri-Environment Advisory Activities Effects on Best Management Practices Adoption," MPRA Paper 18961, University Library of Munich, Germany.
    10. Caliendo, Marco & Künn, Steffen & Mahlstedt, Robert, 2017. "The return to labor market mobility: An evaluation of relocation assistance for the unemployed," Journal of Public Economics, Elsevier, vol. 148(C), pages 136-151.
    11. Stefanie Behncke & Markus Frölich & Michael Lechner, 2006. "Aktive Arbeitsmarktpolitik in Deutschland und der Schweiz: eine Gegenüberstellung," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 75(3), pages 118-154.
    12. Michael Lechner & Markus Froelich, 2010. "Combining Matching and Nonparametric IV Estimation: Theory and an Application to the Evaluation of Active Labour Market Policies," University of St. Gallen Department of Economics working paper series 2010 2010-21, Department of Economics, University of St. Gallen.
    13. Lechner, Michael, 2013. "Treatment effects and panel data," Economics Working Paper Series 1314, University of St. Gallen, School of Economics and Political Science.
    14. Burt S. Barnow & Jeffrey Smith, 2015. "Employment and Training Programs," NBER Chapters,in: Economics of Means-Tested Transfer Programs in the United States, volume 2, pages 127-234 National Bureau of Economic Research, Inc.
    15. 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.
    16. Poeschel, Friedrich, 2014. "Assignment vs. choice: lessons from training vouchers," Annual Conference 2014 (Hamburg): Evidence-based Economic Policy 100606, Verein für Socialpolitik / German Economic Association.
    17. Christian Volpe Martincus & Jerónimo Carballo, 2010. "Entering new country and product markets: does export promotion help?," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 146(3), pages 437-467, September.
    18. Ham, John C. & Li, Xianghong & Reagan, Patricia B., 2011. "Matching and semi-parametric IV estimation, a distance-based measure of migration, and the wages of young men," Journal of Econometrics, Elsevier, vol. 161(2), pages 208-227, April.
    19. Dauth, Christine, 2017. "Regional discontinuities and the effectiveness of further training subsidies for low-skilled employees," IAB Discussion Paper 201707, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    20. Christian Volpe Martincus & Jerónimo Carballo, 2010. "Entering new country and product markets: does export promotion help?," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 146(3), pages 437-467, September.

    More about this item

    Keywords

    local average treatment effect; conditional local IV; active labour market policy; geographic variation; state borders; Fuller estimator; Switzerland;

    JEL classification:

    • J68 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Public Policy
    • 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

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