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Measurement Error Bias Reduction in Unemployment Durations

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  • Montezuma Dumangane

    (Institute for Fiscal Studies)

Abstract

The impact of duration response measurement error is investigated by using small variance approximations. The inconsistency of GMM estimators that ignore measurement error is studied for both single spell models with right censoring, and for a two spell lagged duration dependence model. The results suggest a corrected GMM estimator for the error free and measurement error distributions. When the error free density is known, identification is achieved by using the moment condition that defines the measurement error sensitive specification score test. The results are applied to unemployment duration data from the BHPS.

Suggested Citation

  • Montezuma Dumangane, 2006. "Measurement Error Bias Reduction in Unemployment Durations," CeMMAP working papers CWP03/06, Centre for Microdata Methods and Practice, Institute for Fiscal Studies.
    • Handle: RePEc:ifs:cemmap:03/06
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    File URL: http://cemmap.ifs.org.uk/wps/cwp0603.pdf
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    References listed on IDEAS

    as
    1. Atkinson, A. B. & Gomulka, J. & Micklewright, J. & Rau, N., 1984. "Unemployment benefit, duration and incentives in Britain : How robust is the evidence?," Journal of Public Economics, Elsevier, vol. 23(1-2), pages 3-26.
    2. repec:adr:anecst:y:1999:i:55-56:p:09 is not listed on IDEAS
    3. Jason Abrevaya & Jerry A. Hausman, 1999. "Semiparametric Estimation with Mismeasured Dependent Variables: An Application to Duration Models for Unemployment Spells," Annals of Economics and Statistics, GENES, issue 55-56, pages 243-275.
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