Scandinavian Working Papers in Economics

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

No 2015:10: Policy discontinuity and duration outcomes

Gerard J. van den Berg (), Antoine Bozio and Mónica Costa Dias ()
Additional contact information
Gerard J. van den Berg: IFAU - Institute for Evaluation of Labour Market and Education Policy, Postal: Box 513, SE-751 20 Uppsala, Sweden
Antoine Bozio: Paris School of Economics
Mónica Costa Dias: Institute for Fiscal Studies

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. 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.

Keywords: policy evaluation; hazard rate; identification; causality; regression discontinuity; selectivity; kernel hazard estimation; local linear regression; average treatment effect; job search assistance; youth unemployment

JEL-codes: C14; C25; J64

55 pages, May 27, 2015

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