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Combining Matching and Nonparametric IV Estimation: Theory and an Application to the Evaluation of Active Labour Market Policies


  • Michael Lechner


  • Markus Froelich



In this paper, we show how instrumental variable and matching estimators can be combined in order to identify a broader array of treatment effects. Instrumental variable estimators are known to estimate effects only for the compliers, which often represent only a small subset of the entire population. By combining IV with matching, we can estimate also the treatment effects for the always- and never-takers. In our application to the active labour market programmes in Switzerland, we find large positive employment effects for at least 8 years after treatment for the compliers. On the other hand, the effects for the always- and never-participants are small. In addition, when examining the potential outcomes separately, we find that the compliers have the worst employment outcomes without treatment. Hence, the assignment policy of the caseworkers was inefficient in that the always-participants were neither those with the highest treatment effect nor those with the largest need for assistance.

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  • 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.
  • Handle: RePEc:usg:dp2010:2010-21

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    References listed on IDEAS

    1. Gerfin, Michael & Lechner, Michael & Steiger, Heidi, 2005. "Does subsidised temporary employment get the unemployed back to work? Aneconometric analysis of two different schemes," Labour Economics, Elsevier, vol. 12(6), pages 807-835, December.
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    5. Markus Frölich, 2004. "Finite-Sample Properties of Propensity-Score Matching and Weighting Estimators," The Review of Economics and Statistics, MIT Press, vol. 86(1), pages 77-90, February.
    6. Rafael Lalive & Jan C. van Ours & Josef Zweimueller, "undated". "The Impact of Active Labor Market Programs on the Duration of Unemployment," IEW - Working Papers 041, Institute for Empirical Research in Economics - University of Zurich.
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    More about this item


    Local average treatment effect; conditional local IV; matching estimation; heterogeneous treatment effects; active labour market policy; state borders; geographic variation.;

    JEL classification:

    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • C2 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables
    • J68 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Public Policy

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