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Policy Discontinuity and Duration Outcomes

Listed author(s):
  • van den Berg, Gerard J.

    ()

    (University of Bristol)

  • Bozio, Antoine

    ()

    (Paris School of Economics)

  • Costa Dias, Monica

    ()

    (Institute for Fiscal Studies, London)

Causal effects of a policy change on hazard rates of a duration outcome variable are not identified from a comparison of spells before and after the policy change, if there is unobserved heterogeneity in the effects and no model structure is imposed. We develop a discontinuity approach that overcomes this by considering spells that include the moment of the policy change and by exploiting variation in the moment at which different cohorts are exposed to the policy change. We prove identification of average treatment effects on hazard rates without model structure. We estimate these effects by kernel hazard regression. In effect, we merge duration analysis and discontinuity analysis. We use the introduction of the NDYP program for young unemployed individuals in the UK to estimate average program participation effects on the exit rate to work as well as anticipation effects.

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File URL: http://ftp.iza.org/dp8450.pdf
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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 8450.

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Length: 56 pages
Date of creation: Aug 2014
Handle: RePEc:iza:izadps:dp8450
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  1. Monica Costa Dias & Hidehiko Ichimura & Gerard Van Den Berg, 2007. "The matching method for treatment evaluation with selective participation and ineligibles," CeMMAP working papers CWP33/07, Centre for Microdata Methods and Practice, Institute for Fiscal Studies.
  2. John Van Reenen, 2004. "Active Labor Market Policies and the British New Deal for the Young Unemployed in Context," NBER Chapters,in: Seeking a Premier Economy: The Economic Effects of British Economic Reforms, 1980-2000, pages 461-496 National Bureau of Economic Research, Inc.
  3. 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.
  4. Dorsett, Richard, 2006. "The new deal for young people: effect on the labour market status of young men," Labour Economics, Elsevier, vol. 13(3), pages 405-422, June.
  5. Meyer, Bruce D, 1996. "What Have We Learned from the Illinois Reemployment Bonus Experiment?," Journal of Labor Economics, University of Chicago Press, vol. 14(1), pages 26-51, January.
  6. Fredriksson, Peter & Johansson, Per, 2008. "Dynamic Treatment Assignment," Journal of Business & Economic Statistics, American Statistical Association, vol. 26, pages 435-445.
  7. Abbring, Jaap H & van den Berg, Gerard J, 2005. "Social experiments and intrumental variables with duration outcomes," Working Paper Series 2005:11, IFAU - Institute for Evaluation of Labour Market and Education Policy.
  8. Caroline Hall & Laura Hartman, 2010. "Moral hazard among the sick and unemployed: evidence from a Swedish social insurance reform," Empirical Economics, Springer, vol. 39(1), pages 27-50, August.
  9. Richard Blundell & Monica Costa Dias & Costas Meghir & John Van Reenen, 2004. "Evaluating the Employment Impact of a Mandatory Job Search Program," Journal of the European Economic Association, MIT Press, vol. 2(4), pages 569-606, June.
  10. Jens Perch Nielsen, 2001. "Boundary and Bias Correction in Kernel Hazard Estimation," Scandinavian Journal of Statistics, Danish Society for Theoretical Statistics;Finnish Statistical Society;Norwegian Statistical Association;Swedish Statistical Association, vol. 28(4), pages 675-698.
  11. Brinch, Christian N., 2007. "Nonparametric Identification Of The Mixed Hazards Model With Time-Varying Covariates," Econometric Theory, Cambridge University Press, vol. 23(02), pages 349-354, April.
  12. McVicar, Duncan & Jan M Podivinsky, 2003. "Unemployment Duration Before and After New Deal," Royal Economic Society Annual Conference 2003 153, Royal Economic Society.
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