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Nonparametric identification of dynamic treatment effects in competing risks models

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  • Drepper, Bettina
  • Effraimidis, Georgios

Abstract

We introduce a dynamic treatment to the mixed proportional hazard competing risks model and allow for selection on unobservables. Our model can e.g. be used to evaluate the effect of benefit sanctions on the transition rate out of unemployment when more than one exit risk is of interest. Imposing a benefit sanction will influence the transition rate to employment. However, the sanction can also affect the decision of an individual to exit the labor force. The latter effect is often ignored in empirical work. In this paper we present a general model which allows to identify different effects of a treatment such as a sanction on several competing exit risks such as 'finding work' vs. 'exit the labor force'. Our approach exploits the timing at which the individual enters into treatment by adding the hazard rate of the duration to treatment as an additional equation to the competing risks model. We present a new identification result of this model for single-spell duration data. Furthermore, we intend to include an empirical application in this paper to illustrate the estimation procedure.

Suggested Citation

  • Drepper, Bettina & Effraimidis, Georgios, 2012. "Nonparametric identification of dynamic treatment effects in competing risks models," VfS Annual Conference 2012 (Goettingen): New Approaches and Challenges for the Labor Market of the 21st Century 66060, Verein für Socialpolitik / German Economic Association.
    • Handle: RePEc:zbw:vfsc12:66060
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    References listed on IDEAS

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    1. Gerard J. van den Berg & Bas van der Klaauw & Jan C. van Ours, 2004. "Punitive Sanctions and the Transition Rate from Welfare to Work," Journal of Labor Economics, University of Chicago Press, vol. 22(1), pages 211-241, January.
    2. Patrick Arni & Rafael Lalive & Jan C. Van Ours, 2013. "How Effective Are Unemployment Benefit Sanctions? Looking Beyond Unemployment Exit," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 28(7), pages 1153-1178, November.
    3. Chris Elbers & Geert Ridder, 1982. "True and Spurious Duration Dependence: The Identifiability of the Proportional Hazard Model," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 49(3), pages 403-409.
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    More about this item

    JEL classification:

    • C41 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Duration Analysis; Optimal Timing Strategies
    • C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

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