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Policy Discontinuity and Duration Outcomes

Author

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  • van den Berg, Gerard J.

    (University of Groningen)

  • Bozio, Antoine

    (Paris School of Economics)

  • Costa Dias, Monica

    (Institute for Fiscal Studies, London)

Abstract

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.

Suggested Citation

  • van den Berg, Gerard J. & Bozio, Antoine & Costa Dias, Monica, 2014. "Policy Discontinuity and Duration Outcomes," IZA Discussion Papers 8450, Institute of Labor Economics (IZA).
  • Handle: RePEc:iza:izadps:dp8450
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    References listed on IDEAS

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    Cited by:

    1. van der Klaauw, B. & van Ours, J.C., 2010. "Carrot and Stick : How Reemployment Bonuses and Benefit Sanctions Affect Job Finding Rates," Other publications TiSEM f368f876-0bd7-499d-8211-d, Tilburg University, School of Economics and Management.
    2. Muller, Paul & van der Klaauw, Bas & Heyma, Arjan, 2017. "Comparing Econometric Methods to Empirically Evaluate Job-Search Assistance," Working Papers in Economics 691, University of Gothenburg, Department of Economics.
    3. Gerard J. van den Berg & Annette H. Bergemann & Marco Caliendo, 2009. "The Effect of Active Labor Market Programs on Not-Yet Treated Unemployed Individuals," Journal of the European Economic Association, MIT Press, vol. 7(2-3), pages 606-616, 04-05.
    4. Annette Bergemann & Marco Caliendo & Gerard J. van den Berg & Klaus F. Zimmermann, 2011. "The threat effect of participation in active labor market programs on job search behavior of migrants in Germany," International Journal of Manpower, Emerald Group Publishing, vol. 32(7), pages 777-795, October.
    5. Gerard J. van den Berg & Petyo Bonev & Enno Mammen, 2020. "Nonparametric Instrumental Variable Methods for Dynamic Treatment Evaluation," The Review of Economics and Statistics, MIT Press, vol. 102(2), pages 355-367, May.
    6. Gürtzgen, Nicole & (né Nolte), André Diegmann & Pohlan, Laura & van den Berg, Gerard J., 2021. "Do digital information technologies help unemployed job seekers find a job? Evidence from the broadband internet expansion in Germany," European Economic Review, Elsevier, vol. 132(C).
    7. Arni, Patrick & Berg, Gerard van den & Lalive, Rafael, 2015. "Treatment Versus Regime Effects of Carrots and Sticks," CEPR Discussion Papers 10913, C.E.P.R. Discussion Papers.
    8. Bruno Decreuse & Guillaume Wilemme, 2019. "Age Discontinuity and Nonemployment Benefit Policy Evaluation through the Lens of Job Search Theory," Working Papers halshs-02072800, HAL.
    9. Koning, Pierre & van Sonsbeek, Jan-Maarten, 2017. "Making disability work? The effects of financial incentives on partially disabled workers," Labour Economics, Elsevier, vol. 47(C), pages 202-215.
    10. Paul Muller & Bas van der Klaauw & Arjan Heyma, 2020. "Comparing econometric methods to empirically evaluate activation programs for job seekers," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 35(5), pages 526-547, August.
    11. Marco Caliendo & Ricarda Schmidl, 2016. "Youth unemployment and active labor market policies in Europe," IZA Journal of Labor Policy, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 5(1), pages 1-30, December.
    12. Rüdiger Wapler & Daniel Werner & Katja Wolf, 2018. "Active labour market policies in Germany: do regional labour markets benefit?," Applied Economics, Taylor & Francis Journals, vol. 50(51), pages 5561-5578, November.
    13. Crépon, Bruno & Ferracci, Marc & Jolivet, Grégory & van den Berg, Gerard J., 2010. "Analyzing the Anticipation of Treatments Using Data on Notification Dates," IZA Discussion Papers 5265, Institute of Labor Economics (IZA).
    14. Berg, Gerard J. van den & Bonev, Petyo & Mammen, Enno, 2016. "Nonparametric instrumental variable methods for dynamic treatment evaluation," Working Papers 16-02, University of Mannheim, Department of Economics.
    15. Xu, Ke-Li, 2018. "A semi-nonparametric estimator of regression discontinuity design with discrete duration outcomes," Journal of Econometrics, Elsevier, vol. 206(1), pages 258-278.
    16. Eliason, Marcus & Johansson, Per & Nilsson, Martin, 2019. "Forward-looking moral hazard in social insurance," Labour Economics, Elsevier, vol. 60(C), pages 84-98.

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    More about this item

    Keywords

    policy evaluation; hazard rate; identification; causality; regression discontinuity; selectivity; kernel hazard estimation; local linear regression; average treatment effect; job search assistance; youth unemployment;
    All these keywords.

    JEL classification:

    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions; Probabilities

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