Regional Treatment Intensity as an Instrument for the Evaluation of Labour Market Policies

75 Pages Posted: 16 Apr 2004

See all articles by Markus Frölich

Markus Frölich

Universität Mannheim, Chair of Econometrics

Michael Lechner

University of St. Gallen - Swiss Institute for Empirical Economic Research

Multiple version iconThere are 2 versions of this paper

Date Written: March 2004

Abstract

The effects of active labour market policies (ALMP) on individual employment chances and earnings are evaluated by non-parametric instrumental variables based on Swiss administrative data with detailed regional information. Using an exogenous variation in the participation probabilities across fairly autonomous regional units (cantons) generated by the federal government, we identify the effects of ALMP by comparing individuals living in the same local labour market but in different cantons. Taking account of small sample problems occurring in IV estimation, our results suggest that ALMP increases individual employment probabilities by about 10% in the short term for a weighted subpopulation of compliers.

Keywords: Local average treatment effect, active labour market policy, state borders, geographic variation, weak instruments, small sample problems of IV, Switzerland, fuller estimator

JEL Classification: C14, J68

Suggested Citation

Frölich, Markus and Lechner, Michael, Regional Treatment Intensity as an Instrument for the Evaluation of Labour Market Policies (March 2004). Available at SSRN: https://ssrn.com/abstract=531543 or http://dx.doi.org/10.2139/ssrn.531543

Markus Frölich

Universität Mannheim, Chair of Econometrics ( email )

L7, 3-5
68131 Mannheim
D-Mannheim, 68131
Germany

HOME PAGE: http://froelich.vwl.uni-mannheim.de

Michael Lechner (Contact Author)

University of St. Gallen - Swiss Institute for Empirical Economic Research ( email )

Varnbuelstrasse 14
St. Gallen, 9000
Switzerland
+41 71 224 2320 (Phone)

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