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IFAU - Institute for Evaluation of Labour Market and Education Policy Working Paper Series
IFAU - Institute for Evaluation of Labour Market and Education Policy

No 2008:7:
Duration dependence versus unobserved heterogeneity in treatment effects: Swedish labor market training and the transition rate to employment

Katarina Richardson and Gerard J van den Berg ()

Abstract: The vocational employment training program is the most expensive training program in Sweden and a cornerstone of labor market policy. We analyze its causal effects on the individual transition rate from unemployment to employment by exploiting variation in the timing of treatment and outcome, dealing with selectivity on unobservables. We demonstrate the appropriateness of this approach in our context by studying the enrollment process. We develop a model allowing for duration dependence and unobserved heterogeneity (leading to spurious duration dependence) in the treatment effect itself, and we prove non-parametric identification. The data cover the population and include multiple unemployment spells for many individuals. The results indicate a large significantly positive effect on exit to work shortly after exiting the program. The effect at the inidividual level diminishes after some weeks. When taking account of the time spent in the program, the effect on the mean unemployment duration is small.

Keywords: Vocational training; progam evaluation; duration analysis; selectivity bias; dynamic treatments; active labor policy; identification; (follow links to similar papers)

JEL-Codes: C14; C21; C41; J64; (follow links to similar papers)

49 pages, April 27, 2008

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This paper is published as:
Richardson, Katarina and Gerard J van den Berg, (2013), 'Duration dependence versus unobserved heterogeneity in treatment effects: Swedish labor market training and the transition rate to employment', Journal of Applied Econometrics, Vol. 28, March, No. 2, pages 325-351



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