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Exploiting regional treatment intensity for the evaluation of labour market policies

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  • Markus Frölich

    (Institute for Fiscal Studies)

  • Michael Lechner

    (Institute for Fiscal Studies)

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.

Suggested Citation

  • Markus Frölich & Michael Lechner, 2006. "Exploiting regional treatment intensity for the evaluation of labour market policies," CeMMAP working papers CWP11/06, Centre for Microdata Methods and Practice, Institute for Fiscal Studies.
    • Handle: RePEc:ifs:cemmap:11/06
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    File URL: http://cemmap.ifs.org.uk/wps/cwp1106.pdf
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    More about this item

    Keywords

    local average treatment effect; conditional local IV; active labour market policy; state borders; geographic variation; Switzerland; Fuller estimator;
    All these keywords.

    JEL classification:

    • J68 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Public Policy
    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models

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