Working Paper: CEPR ID: DP5728
Authors: Markus Frlich; Michael Lechner
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.
Keywords: Active Labour Market Policy; Conditional Local IV; Fuller Estimator; Geographic Location; Local Average Treatment Effect; State Borders; Switzerland
JEL Codes: C14; C21; J68
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| active labour market policies (ALMP) (J68) | individual employment probabilities (J68) |
| regional quotas (R50) | treatment intensity (C32) |
| treatment intensity (C32) | individual employment probabilities (J68) |
| active labour market policies (ALMP) (J68) | employment outcomes (J68) |
| active labour market policies (ALMP) (J68) | treatment effects for never-participants (C90) |
| active labour market policies (ALMP) (J68) | treatment effects for always-participants (C90) |
| active labour market policies (ALMP) (J68) | treatment effects for marginal participants (C21) |