DP5895 Swedish Labour Market Training and the Duration of Unemployment

Author(s): Gerard van den Berg, Katarina Richardson
Publication Date: October 2006
Keyword(s): duration analysis, duration dependence, hazard rate, identification, program evaluation, selectivity bias, transition to work, treatment effect, vocational training
JEL(s): C14, C41, J64
Programme Areas: Labour Economics
Link to this Page: www.cepr.org/active/publications/discussion_papers/dp.php?dpno=5895

The vocational employment training program is the most ambitious and expensive training program in Sweden and a cornerstone of labor market policy. We analyze its causal effects on the individual transition rate from unemployment to employment by exploiting variation in the timing of treatment and outcome, dealing with selectivity on unobservables. We demonstrate the appropriateness of this approach in our context by studying the process leading to enrollment. We also develop a model allowing for duration dependence and unobserved heterogeneity (leading to spurious duration dependence) in the treatment effect itself, and we prove non-parametric identification. 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 often close to zero.