quick job entry or long term human capital development the dynamic effects of alternative training schemes this study evaluates and compares the eectiveness of two alternative training schemes for the unemployed short job search oriented training and long human capital oriented training we investigate the impact dynamics of these pro grams considering both unemployment and employment duration our analysis uses a rich administrative longitudinal data set for germany where both programs were implemented at the same time our estimation strategy flexibly accounts for dy namic selection on observables and unobservables as well as heterogeneous treatment eects the results indicate that short term training schemes can be an eective tool to reduce unemployment in the long run in particular if participation occurs early during unemployment long term training schemes increase the average du ration of employment spells more strongly than short term training however they increase the expected unemployment duration if they are started early during un employment this negative short run impact of long term training is an important driver of its overall eectiveness

tournaments with midterm reviews in many tournaments investments are made over time the question whether to conduct a review once at the end or additionally at points midway through the tournament is a strategic decision if the latter course is chosen then the designer must establish both a rule for aggregating the results of the different reviews and a rule for determining compensations we first study the case of a fixed exogenously given prize and then extend the analysis to the case where the prize is not fixed but may vary with the tournament s outcome it is shown that 1 it is always optimal to assign a higher weight to the final review 2 this weight increases with the dominance of the first stage effort in determining the final review s outcome when the prize is not fixed the optimal design generates an asymmetric tournament in the second stage that favors the winner of the midterm review

punitive sanctions and the transition rate from welfare to work in the netherlands the average exit rate out of welfare is dramatically low most welfare recipients have to comply with guidelines on job search effort that are imposed by the welfare agency if they do not then a sanction in the form of a temporary benefit reduction can be imposed this article investigates the effect of such sanctions on the transition rate from welfare to work using a unique set of rich register data on welfare recipients we find that the imposition of sanctions substantially increases the individual transition rate from welfare to work

measuring the effect of subsidized training programs on movements in and out of employment despite over two decades of u s experience in operating large scale subsidized training programs for low income and unemployed workers the effects of these programs are still highly controversial the controversy arises from the difficulty of specifying the model of participant outcomes in the absence of training that is necessary in any nonexperimental program evaluation in this paper we suggest that some of these difficulties may be overcome by focusing on a very simple measure of outcomes namely the probability of employment we present a variety of estimates of the effect of training on the probability of employment for the 1976 cohort of adult male participants in the comprehensive employment and training act ceta program our methods range from a simple comparison of pre and post training employment probabilities between trainees and nonparticipants to a fully specified first order markov model of employment probabilities with individual heterogeneity there is consistent evidence across methods that ceta participation increased the probability of employment in the three years after training by from 2 to 5 percentage points classroom training programs appear to have had significantly larger effects than on the job programs although the estimated effects of both kinds of programs are positive we also find that movements in and out of employment for trainees and nonparticipants are reasonably well described by a first order process conditional on individual heterogeneity in the context of this model ceta participation appears to have increased both the probability of moving into employment and the probability of continuing employment

job displacement and the transitions to re employment and early retirement for non employed older workers abstract despite the relatively higher frequency of job displacement among older workers in europe little is known about its effect on the work retirement decision employing individual data from the european community household panel for a number of countries with differences in their institutional environments the effect of job displacement for non employed workers is identified separately for the transitions into re employment and retirement the findings suggest that in countries with relatively more generous unemployment insurance provisions for the older unemployed which offer a pathway to early retirement older displaced workers exhibit lower re employment and higher retirement rates compared to the non displaced these results are robust to dynamic selection due to unobserved heterogeneity and to the endogeneity of displacement

discretionary policy and multiple equilibria in lq re models we study discretionary equilibria in dynamic linear quadratic rational expectations models in contrast to the assumptions that pervade this literature we show that these models do have multiple equilibria in some situations we demonstrate the existence of multiple discretionary equilibria by example we investigate general properties of discretionary equilibria and discuss implications for numerical algorithms

social employment of welfare recipients in belgium an evaluation in belgium welfare agencies receive a subsidy to employ welfare recipients for a period sufficiently long to entitle them to unemployment benefits we investigate the effect of this programme on the exit rate from welfare we propose a grouping iv estimator of the programme effect that eliminates selection bias the estimator is consistent even if the selection into the programme depends on the average unobserved characteristics of welfare recipients in a region and in a welfare duration interval without correction for selectivity we find that the programme reduces welfare dependence but after correction this conclusion is reversed

duration dependence versus unobserved heterogeneity in treatment effects swedish labor market training and the transition rate to employment summary the effect of a treatment on the hazard rate of a duration outcome may depend on the elapsed time since treatment in addition treatment effects may be heterogeneous across agents the former gives rise to duration dependence of the treatment effect whereas unobserved heterogeneity gives rise to spurious duration dependence of the observable hazard rate we develop a model allowing for duration dependence and unobserved heterogeneity in the treatment effect the model incorporates a timing of events model and allows for selectivity on unobservables we prove identification exploiting variation in the timing of treatment and outcome in the application we analyze the effects of the swedish vocational employment training program on the individual transition rate from unemployment to work we demonstrate the appropriateness of the approach by studying the enrollment process the data cover the population and include multiple unemployment spells for many individuals the results indicate a large significantly positive effect on exit to work shortly after exiting the program the effect at the individual level diminishes after some weeks when taking account of the time spent in the program the effect on the mean unemployment duration is small copyright 2012 john wiley sons ltd

does the public employment service affect search effort and outcomes in this paper we examine the disincentive effects of the public employment service on the search effort of unemployed workers and on their exit rate from unemployment for that purpose we specify a structural search model with fixed and variable costs of search in which unemployed workers select their optimal search intensity given the exogenous arrival rate of job contacts coming from the public employment agency because the theoretical effect of an increase in this exogenous job contact arrival rate on the structural exit rate from unemployment is ambiguous we estimate this model using individual unemployment duration data our results show that the exit rate from unemployment increases with the arrival rate of job contacts obtained by the public employment service especially for low educated and low skilled workers they also show that the search effort is more costly for low educated women and low skilled adult unemployed workers this last result suggests that a public employment agency that matches searchers and employers is beneficial in the sense that it saves searchers in terms of search costs they would otherwise bear

identification results for duration models with multiple spells the purpose of this paper is to investigate the identifiability of duration models with multiple spells we prove that the results of elbers and ridder 1982 and heckman and singer 1984 can be generalized to multi spell models with lagged duration dependence we also prove that without lagged duration dependence the identification result does not depend on moment conditions or tail conditions on the mixing distribution this result is in contrast to ridder s 1990 result for single spell models

the effect of benefit sanctions on the duration of unemployment this paper investigates the effectiveness of unemployment benefit sanctions in reducing unemployment duration swiss data on benefit sanctions allow us to separate the effect of a warning that a person is not complying with eligibility requirements from the effect of the actual enforcement of a benefit sanction moreover public employment services are given substantial leeway in setting the monitoring intensity results indicate that both warning and enforcement have a positive effect on the exit rate out of unemployment and that increasing the monitoring intensity reduces the duration of unemployment of the nonsanctioned jel j64 j65 j68

evaluating the impact of french employment policies on individual labour market histories this paper deals with the evaluation of some public employment policies set up in france during the 1980 s to improve the labour market prospects of unskilled young workers the evaluation implemented in this paper is restricted to the impact of such public measures on durations and outcomes of subsequent spells of unemployment and employment the econometric study is conducted with non experimental longitudinal microdata recording individual labour nlarket histories a particular attention is paid to the differential effects of various types of measures according to the educational level of recipients programmes involving a higher level of on thejob training such as alternating work training programmes in private firms are principally beneficial to the less educated young workers in contrast for more educated young workers work fare programmes in the public sector decrease the intensity of transition from the subsequent unemployment spell to regular jobs for that subgroup work fare programmes may act as a signal of low employment performance

unemployment insurance in europe unemployment duration and subsequent employment stability the disincentive effect of unemployment insurance on unemployment duration has been the focus of the empirical literature the potential effect of unemployment insurance on post unemployment outcomes which may be regarded as beneficial by improving job matching has attracted much less attention this paper provides evidence on the effect of unemployment benefits on unemployment and employment duration in europe using individual data from the european community household panel for eight countries country specific estimates based on multivariate discrete time duration models controlling for observed and unobserved individual heterogeneity suggest that although receiving benefits has an adverse effect in the sense of increasing unemployment duration there is also a positive effect by increasing subsequent employment duration this beneficial effect of unemployment insurance on employment stability is pronounced in countries with relatively generous benefit systems and for recipients who have remained unemployed for at least six months these findings are in line with theories suggesting a matching effect of unemployment insurance

hiring young unskilled workers on subsidized open ended contracts a good integration programme young labour market entrants account for a high level of unemployment and short term contracts in july 2002 the french government moved to reduce this insecurity at the start of working life by introducing the youth in business contract contrat jeune en entreprise a new contract for young people under 22 years old who dropped out of school before passing their final secondary school examinations under this scheme firms were entitled to claim a subsidy when they hired an eligible young worker on an open ended contract we assess the impact of the youth in business contract on transitions to permanent employment by estimating a dynamic difference in difference model drawing on the french labour force survey we use a new method inspired by keane and sauer 2009 to deal with measurement errors in the data we find that programme eligibility has no effect on transitions to permanent employment in a recession environment

assessing the impact of a wage subsidy for single parents on social assistance this paper studies the impact of a wage subsidy program aimed at long term social assistance recipients in quebec the program closely mimics the self sufficiency project and was implemented for a trial period of one year in 2002 we focus on the labour market transitions of the targeted population starting one year before the implementation of the program and up until the end of 2005 our results show that the duration of spells off social assistance increased while the duration of social assistance spells decreased slightly the response to the program varies considerably both with observed and unobserved characteristics

true and spurious duration dependence the identifiability of the proportional hazard model lancaster and nickell 1980 have argued that in the proportional hazard model the effects of time dependence true duration dependence and unobserved sample heterogeneity spurious duration dependence cannot be distinguished we show that both effects can be distinguished if the model allows for observed explanatory variables in the hazard we also discuss the application of our result to practical situations

subsidized temporary jobs lock in and stepping stone effects this article evaluates the effectiveness of subsidized temporary jobs as stepping stones to regular employment we study a french program that allows job seekers to work part time while remaining registered with the unemployment agency in this program insured individuals concurrently receive part of their unemployment benefits and wage income using administrative data we find that subsidized temporary jobs have both a significant lock in effect and a significant positive post treatment impact on the hazard rate to employment since individuals facing a high implicit tax rate have incentives to self select into better part time jobs we also find that a higher tax rate leads to a weaker lock in effect and a stronger post treatment effect simulations suggest that the lock in effect first dominates but that the overall effect eventually becomes positive they also point to ways of improving the effectiveness of the policy

how effective are unemployment benefit sanctions looking beyond unemployment exit this paper provides a comprehensive evaluation of benefit sanctions i e temporary reductions in unemployment benefits as punishment for noncompliance with eligibility requirements in addition to the effects on unemployment durations we evaluate the effects on post unemployment employment stability on exits from the labor market and on earnings in our analysis we use a rich set of swiss register data which allow us to distinguish between ex ante effects the effects of warnings and the effects of enforcement of benefit sanctions adopting a multivariate mixed proportional hazard approach to address selectivity we find that both warnings and enforcement increase the job finding rate and the exit rate out of the labor force warnings do not affect subsequent employment stability but do reduce post unemployment earnings actual benefit reductions lower the quality of post unemployment jobs both in terms of job duration as well as in terms of earnings the net effect of a benefit sanction on post unemployment income is negative over a period of two years after leaving unemployment workers who got a benefit sanction imposed face a net income loss equivalent to 30 days of full pay due to the ex post effect in addition to that stricter monitoring may reduce net earnings by up to 4 days of pay for every unemployed worker due to the ex ante effect

the impact of active labour market programmes on the duration of unemployment in switzerland this article evaluates the effects of swiss active labour market programmes on the job chances of unemployed workers the main innovation is a comparison of two important dynamic evaluation estimators the matching estimator and the timing of events estimator we find that both estimators generate different treatment effects according to the matching estimator temporary subsidised jobs shorten unemployment duration whereas training programmes and employment programmes do not in contrast the timing of events estimator suggests that none of the swiss active labour market programmes shortens unemployment duration the aim of the present article is to study the impact of active labour market policies almps on the duration of unemployment in switzerland the new swiss almps reflect the increasing consensus among policy makers that actively assisting the unemployed in job search is preferable to simply providing them with passive income support the danger is so the argument goes that reliance on passive income support may reduce work incentives and job search activities and therefore increase the risk of long term unemployment almps are seen by many as the key to minimise these risks the question how participation in almp measures affects labour market histories of individuals has been the subject of substantial debate the main problem is that labour market outcomes for participants may be systematically different from non participants

is labour market training a curse for the unemployed evidence from a social experiment summary in 1994 a social experiment was conducted in denmark where unemployed applicants for classroom training were randomised into treatment and control groups the data are contaminated by the presence of no shows and crossovers biasing the traditional experimental estimator we interpret our experiment within an economic model of agents maximising outcomes facing different cost regimes and present results interpretable within this model surprisingly we find that classroom training significantly increases individual unemployment rates and decreases employability we discuss possible reasons for this finding and some related policy issues copyright 2009 john wiley sons ltd this paper uses data from a social experiment to evaluate the impact of classroom training on the subsequent fraction of time individuals spend in unemployment and in employment and on their wages in doing so we exploit the information from one among only a handful of social experiments conducted in europe on labour market issues social experiments are seen by many as the way to consistently estimate the effect of a policy on an outcome variable of interest the trick is to randomise the selection process itself such that the outcomes in the control group can be used as an estimate of the unobserved counterfactual in this case the outcome of trained individuals in the absence of training however experimental data are often flawed as is the case in the experiment studied in this paper in the present study the data are contaminated by the presence of no shows members of the treatment group who do not show up at the course they signed up for and crossovers members of the control group who end up receiving the treatment they were randomised out of the presence of no shows crossovers and also drop outs is a well known phenomenon in social experiments see heckman et al 1998b 2000 neglecting their presence may seriously bias the estimates of the parameter of interest simply because they constitute the very phenomenon that the experiment is designed to eliminate namely non random selection 1 in the experiment studied in this paper only 52 of

capital controls and foreign exchange market crises in the ems abstract it is widely held that capital controls are necessary to prevent foreign exchange market crises in a fixed but adjustable exchange rate system like the ems it was therefore argued that capital market liberalization which came in july 1990 might lead to recurrent crises in the ems events since july 1990 have shown that capital controls were not necessary for the stability of the ems this paper shows that even with capital controls the system might enter turbulent periods and might experience a self fulfilling balance of payments crisis if the authorities are perceived to dislike high domestic interest rates a crisis can then be triggered by any small shock if the authorities are not willing to raise domestic interest rates sufficiently to defend the exchange rate

attrition in longitudinal panel data and the empirical analysis of dynamic labour market behaviour in the empirical analysis of unemployment durations and job durations it is generally assumed that the stochastic processes underlying labour market behaviour and the behaviour concerning participation in a panel survey are independent however there are reasons to believe that the probability of dropping out of the panel is related to the rate at which a different job is found if there is such a relation and if it is ignored then the estimator of the rate at which individuals become employed or change jobs will generally be inconsistent in this paper we analyse the relation between the duration spent in a particular labour market state and the duration of panel survey participation by explicitly modelling and estimating the joint distribution of both durations the emphasis will be on models allowing for stochastically related unobserved determinants of both types of duration we estimate models both for unemployment durations and for job durations copyright 1994 john wiley sons ltd