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Nonparametric Instrumental Variable Methods for Dynamic Treatment Evaluation

49 Pages Posted: 7 Mar 2016  

Gerard J. van den Berg

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

Petyo Bonev

Mines-Paristech

Enno Mammen

University of Mannheim - Department of Economics

Abstract

We develop a nonparametric instrumental variable approach for the estimation of average treatment effects on hazard rates and conditional survival probabilities, without model structure. We derive constructive identification proofs for average treatment effects under noncompliance and dynamic selection, exploiting instrumental variation taking place during ongoing spells. We derive asymptotic distributions of the corresponding estimators. This includes a detailed examination of noncompliance in a dynamic context.In an empirical application, we evaluate the French labor market policy reform PARE which abolished the dependence of unemployment insurance benefits on the elapsed unemployment duration and simultaneously introduced additional active labor market policy measures. The estimated effect of the reform on the survival function of the duration of unemployment duration is positive and significant. Neglecting selectivity leads to an underestimation of the effects in absolute terms.

Keywords: hazard rate, duration variable, treatment effects, survival function, noncompliance, regression discontinuity design, unemployment, labor market policy reform, active labor market policy, unemployment benefits

JEL Classification: C14, C41, J64, J65

Suggested Citation

van den Berg, Gerard J. and Bonev, Petyo and Mammen, Enno, Nonparametric Instrumental Variable Methods for Dynamic Treatment Evaluation. IZA Discussion Paper No. 9782. Available at SSRN: https://ssrn.com/abstract=2742570

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)

77 Bastwick Street
London, EC1V 3PZ
United Kingdom

IZA Institute of Labor Economics

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

Tinbergen Institute

Burg. Oudlaan 50
Rotterdam, 3062 PA
Netherlands

Petyo Bonev

Mines-Paristech

60 Boulevard Saint-Michel
Paris, 75272
France

Enno Mammen

University of Mannheim - Department of Economics ( email )

Mannheim, 68131
Germany

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