Estimating the Latent Effect of Unemployment Benefits on Unemployment Duration
Lingnan University, Hong Kong Institute of Business Studies
Institute for Employment Research (IAB); University of Erlangen-Nuremberg; Institute for the Study of Labor (IZA)
Ralf A. Wilke
University of York (UK); Center for European Economic Research (ZEW); Policy Studies Institute (PSI)
IZA Discussion Paper No. 6650
We estimate the effect of a shortening of unemployment benefit entitlements on unemployment duration. Previous studies on the same or related problems have not taken into account that the competing risks duration model is not identified and we shed first light on the question whether the non identification problem may preclude informative results. It turns out that the identification bounds for the parameters of interest are very wide in the absence of strong assumptions. We suggest an assumption on the dependence structure between risks which is milder than what conventional duration models assume. Under this assumption, the identification bounds are tighter and become informative for the direction of the treatment effect. We find evidence that the unemployed with higher pre-unemployment earnings are more likely to enter full-time employment and, in particular, subsidized self-employment.
Number of Pages in PDF File: 35
Keywords: dependent censoring, partial identification, difference-in-differences, unemployment duration, unemployment benefits
JEL Classification: C34, C41, J64working papers series
Date posted: June 23, 2012
© 2013 Social Science Electronic Publishing, Inc. All Rights Reserved.
This page was processed by apollo7 in 0.375 seconds