Policy discontinuity and duration outcomes

Author: Gerard J. van den Berg, And Antoine Bozio, And Mónica Costa Dias, And

Published in: Quantitative Economics, vol. 11, no. 3, pp. 871–916

Summary of Working paper 2015:10

Causal effects of a policy change on hazard rates of a duration outcome variable are not identified from a comparison of spells before and after the policy change, if there is unobserved heterogeneity in the effects and no model structure is imposed. We develop a discontinuity approach that overcomes this by considering spells that include the moment of the policy change and by exploiting variation in the moment at which different cohorts are exposed to the policy change. We prove identification of average treatment effects on hazard rates without model structure. We estimate these effects by kernel hazard regression. We use the introduction of the NDYP program for young unemployed individuals in the UK to estimate average program participation effects on the exit rate to work as well as anticipation effects.