The Effect of Sample Selection and Initial Conditions in Duration Models: Evidence from Experimental Data on Training

John C Ham and Robert LaLonde

Econometrica, 1996, vol. 64, issue 1, 175-205

Abstract: The authors investigate the separate effects of a training program on the duration of participants' subsequent employment and unemployment spells. This program randomly assigned volunteers to treatment and control groups. However, the treatments and controls experiencing subsequent employment and unemployment spells are not generally comparable subsets of the initial groups. Standard practice in duration models ignores this issue, leading to a sample selection problem and misleading estimates of the training effects. The authors propose an estimator that addresses this problem and find that the program studied, the National Supported Work Demonstration, raised trainees' employment rates solely by lengthening their employment durations. Copyright 1996 by The Econometric Society.

Date: 1996
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