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Empirical Monte Carlo evidence on estimation of Timing-of-Events models

Stefano Lombardi, Gerard J. van den Berg () and Johan Vikström ()
Additional contact information
Gerard J. van den Berg: University of Groningen, Postal: University of Groningen, University Medical Center Groningen,
Johan Vikström: IFAU - Institute for Evaluation of Labour Market and Education Policy, Postal: Institute for Evaluation of Labour Market and Education Policy, P O Box 513, SE-751 20 Uppsala, Sweden

No 2020:26, Working Paper Series from IFAU - Institute for Evaluation of Labour Market and Education Policy

Abstract: This paper builds on the Empirical Monte Carlo simulation approach developed by Huber et al. (2013) to study the estimation of Timing-of-Events (ToE) models. We exploit rich Swedish data of unemployed job-seekers with information on participation in a training program to simulate placebo treatment durations. We first use these simulations to examine which covariates are key confounders to be included inselection models. The joint inclusion of specific short-term employment history indicators (notably, the share of time spent in employment), together with baseline socio-economic characteristics, regional and inflow timing information,is important to deal with selection bias. Next, we omit subsets of explanatory variables and estimate ToE models with discrete distributions for the ensuing systematic unobserved heterogeneity. In many cases the ToE approach provides accurate effect estimates, especially if time-varying variation in the unemployment rate of the local labor market is taken into account. However, assuming too many or too few support points for unobserved heterogeneity may lead to large biases. Information criteria, in particular those penalizing parameter abundance, are useful to select the number of support points.

Keywords: duration analysis; unemployment; propensity score; matching; training; employment (search for similar items in EconPapers)
JEL-codes: C14 C15 C41 J64 (search for similar items in EconPapers)
Pages: 47 pages
Date: 2020-12-29, Revised 2021-01-05
New Economics Papers: this item is included in nep-ecm, nep-lab, nep-ore and nep-ure
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Working Paper: Empirical Monte Carlo Evidence on Estimation of Timing-of-Events Models (2021) Downloads
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