Policy Discontinuity and Duration Outcomes

56 Pages Posted: 27 Sep 2014

See all articles by Gerard J. van den Berg

Gerard J. van den Berg

VU University Amsterdam - Department of Economics; Centre for Economic Policy Research (CEPR); IZA Institute of Labor Economics; Tinbergen Institute

Antoine Bozio

Institute for Fiscal Studies (IFS)

Monica Costa Dias

Institute for Fiscal Studies (IFS)

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.

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 Classification: J64, C14, C25

Suggested Citation

van den Berg, Gerard J. and Bozio, Antoine and Costa Dias, Monica, Policy Discontinuity and Duration Outcomes. IZA Discussion Paper No. 8450. Available at SSRN: https://ssrn.com/abstract=2502310

Gerard J. Van den Berg (Contact Author)

VU University Amsterdam - Department of Economics ( email )

De Boelelaan 1105
1081 HV Amsterdam
Netherlands
+31 20 444 6132 (Phone)
+32 20 444 6020 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Tinbergen Institute

Burg. Oudlaan 50
Rotterdam, 3062 PA
Netherlands

Antoine Bozio

Institute for Fiscal Studies (IFS) ( email )

7 Ridgmount Street
London, WC1E 7AE
United Kingdom

HOME PAGE: http://www.ifs.org.uk

Monica Costa Dias

Institute for Fiscal Studies (IFS) ( email )

7 Ridgmount Street
London, WC1E 7AE
United Kingdom

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