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Modelling heaping effects in unemployment duration models - With an application to retrospective event data in the German socio-economic panel

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  • Kraus, Florian
  • Steiner, Viktor

Abstract

Unemployment duration data derived from retrospective surveys often show an abnormal concentration of responses at certain durations. This common kind of measurement error is known as "heaping" in the statistical literature. Although heaping effects may lead to severe biases in estimated coefficients of duration models, in applied work researchers have either neglected them altogether or tried to account for them in an ad hoc way. This is also the case for recent microeconometric research based on unemployment duration data derived from the retrospective calendar information in the German Socio-Economic Panel, where a very high proportion of all unemployment spells beginning in January or end in December of each year. We show how this kind of heaping can be modelled within a maximum likelihood framework using external validation information and demonstrate for this particular data set how parameter estimates in discrete-time proportional hazard models of unemployment duration are affected by alternative specifications of the heaping mechanism. Durmain result is that parameter estimates are generally rather insensitive to whether or not heaping is explicitly taken into account and to different assumptions about the heaping mechanism, but may be substantially affected by ad hoc procedures to contral for heaping which tend to pick up selectivity effects and censoring.

Suggested Citation

  • Kraus, Florian & Steiner, Viktor, 1995. "Modelling heaping effects in unemployment duration models - With an application to retrospective event data in the German socio-economic panel," ZEW Discussion Papers 95-09, ZEW - Leibniz Centre for European Economic Research.
  • Handle: RePEc:zbw:zewdip:9509
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    References listed on IDEAS

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    1. Hunt, Jennifer, 1995. "The Effect of Unemployment Compensation on Unemployment Duration in Germany," Journal of Labor Economics, University of Chicago Press, vol. 13(1), pages 88-120, January.
    2. Torelli, Nicola & Trivellato, Ugo, 1993. "Modelling inaccuracies in job-search duration data," Journal of Econometrics, Elsevier, vol. 59(1-2), pages 187-211, September.
    3. Gert G. Wagner & Jürgen Schupp & Ulrich Rendtel, 1991. "The Socio-Economic Panel (SOEP) for Germany - Methods of Production and Management of Longitudinal Data," Discussion Papers of DIW Berlin 31a, DIW Berlin, German Institute for Economic Research.
    4. Lancaster,Tony, 1992. "The Econometric Analysis of Transition Data," Cambridge Books, Cambridge University Press, number 9780521437899, October.
    5. Kiefer, Nicholas M, 1988. "Economic Duration Data and Hazard Functions," Journal of Economic Literature, American Economic Association, vol. 26(2), pages 646-679, June.
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    Cited by:

    1. Marjo Pyy-Martikainen & Ulrich Rendtel, 2008. "Assessing the impact of initial nonresponse and attrition in the analysis of unemployment duration with panel surveys," AStA Advances in Statistical Analysis, Springer;German Statistical Society, vol. 92(3), pages 297-318, August.

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