Time Aggregation and State Dependence in Welfare Receipt

41 Pages Posted: 6 Sep 2017

See all articles by Manudeep Bhuller

Manudeep Bhuller

University of Oslo - Department of Economics; Statistics Norway

Christian Brinch

University of Oslo

Sebastian Königs

affiliation not provided to SSRN

Multiple version iconThere are 3 versions of this paper

Date Written: September 2017

Abstract

This article tests the validity of the conditional Markov assumption in a dynamic discrete‐choice model of welfare benefit receipt dynamics, using Norwegian administrative data. Exploiting its implied time aggregation properties, we find that the model is seriously mis‐specified. Estimated state dependence varies strongly with the time unit of analysis, with the average treatment effect of past benefit receipt increasing with the level of aggregation. When permitting richer types of benefit dynamics, we find evidence for duration and occurrence dependence in benefit receipt and disparities in the effects of observed and persistent unobserved characteristics on the benefit entry and persistence processes.

Suggested Citation

Bhuller, Manudeep and Brinch, Christian and Königs, Sebastian, Time Aggregation and State Dependence in Welfare Receipt (September 2017). The Economic Journal, Vol. 127, Issue 604, pp. 1833-1873, 2017. Available at SSRN: https://ssrn.com/abstract=3031011 or http://dx.doi.org/10.1111/ecoj.12366

Manudeep Bhuller (Contact Author)

University of Oslo - Department of Economics ( email )

P.O. Box 1095 Blindern
N-0317 Oslo
Norway

HOME PAGE: http://sites.google.com/site/manudeepbhuller

Statistics Norway ( email )

N-0033 Oslo
Norway

HOME PAGE: http://sites.google.com/site/manudeepbhuller

Christian Brinch

University of Oslo ( email )

PO Box 6706 St Olavs plass
N-0317 Oslo
Norway

Sebastian Königs

affiliation not provided to SSRN

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