Exploiting Regional Treatment Intensity for the Evaluation of Labour Market Policies

IZA Discussion Paper No. 2144

University of St. Gallen Economics Discussion Paper No. 2006-12

55 Pages Posted: 30 May 2006

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: May 2006

Abstract

We estimate the effects of active labour market policies (ALMP) on subsequent employment by nonparametric instrumental variables and matching estimators. Very informative administrative Swiss data with detailed regional information are combined with exogenous regional variation in programme participation probabilities, which generate an instrument within well-defined local labour markets. This allows pursuing instrumental variable as well as matching estimation strategies. A specific combination of those methods identifies a new type of effect heterogeneity. We find that ALMP increases individual employment probabilities by about 15% in the short term for unemployed that may be called "marginal" participants. The effects seem to be considerably smaller for those unemployed not marginal to the participation decision.

Keywords: local average treatment effect, conditional local IV, active labour market policy

JEL Classification: J68, C14, C21

Suggested Citation

Frölich, Markus and Lechner, Michael, Exploiting Regional Treatment Intensity for the Evaluation of Labour Market Policies (May 2006). IZA Discussion Paper No. 2144, University of St. Gallen Economics Discussion Paper No. 2006-12, Available at SSRN: https://ssrn.com/abstract=905095

Markus Frölich (Contact Author)

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

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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