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Coping with Heterogeneities in the Difference in Differences Design

Author

Listed:
  • Johansson, Sten

    (Trade Union Institute for Economic Research)

  • Selén, Jan

    (Trade Union Institute for Economic Research)

Abstract

Carling, Holmlund and Vejsiu reported in the October 2001 issue of the Economic Journal that a cut in the unemployment insurance replacement rate from 80 to 75 percent caused a 10 percent increase in the job finding rate. They also identify an anticipatory reform effect up to five months before the reform. Implied elasticity at 1,6 is high compared to previous research in Sweden and elsewhere. After analysing their data for various heterogeneities, we conclude that the estimated coefficients designed to capture the reform and the anticipatory effects are statistical artefacts. The standard statistical tests and analytic procedures used by CHV do not warn for this eventuality.

Suggested Citation

  • Johansson, Sten & Selén, Jan, 2002. "Coping with Heterogeneities in the Difference in Differences Design," Working Paper Series 183, Trade Union Institute for Economic Research.
    • Handle: RePEc:hhs:fiefwp:0183
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    File URL: http://swopec.hhs.se/fiefwp/papers/WP183.pdf
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    References listed on IDEAS

    as
    1. Johansson, Sten & Selén, Jan, 2000. "Arbetslöshetsförsäkringen och arbetslösheten - En reanalys av IFAUs studie," Working Paper Series 162, Trade Union Institute for Economic Research.
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    Cited by:

    1. repec:hal:spmain:info:hdl:2441/2vagho9cns9668gqt9f4q5v8rg is not listed on IDEAS
    2. repec:spo:wpmain:info:hdl:2441/2vagho9cns9668gqt9f4q5v8rg is not listed on IDEAS
    3. Røed, Knut & Westlie, Lars, 2007. "Unemployment Insurance in Welfare States: Soft Constraints and Mild Sanctions," Memorandum 13/2007, Oslo University, Department of Economics.
    4. Bruno Coquet, 2017. "Les allocations chômage devraient-elles être dégressives ?," SciencePo Working papers Main hal-03457573, HAL.

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    More about this item

    Keywords

    Heterogeneities; Difference in differences design; Unemployment insurance; Unemployment compensation;
    All these keywords.

    JEL classification:

    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings

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