Testing exclusion restrictions at infinity in the semiparametric selection model

The control function in the semiparametric selection model is zero at infinity. This paper proposes additional restrictions of the same type and shows how to use them to test assumed exclusion restrictions necessary for root N estimation of the model. The test is based on the estimated control function and its derivative and takes the form of a GMM step that occurs at infinity. Alternative estimation of the parameters are proposed which do not rely on exclusion restrictions, extending available results for the estimation of the intercept at infinity. Simulations are implemented

Counseling the unemployed: does it lower unemployment duration and recurrence?

This article evaluates the effects of intensive counseling schemes that are provided to about 20% of the unemployed since the 2001 French unemployment policy reform (PARE). Several of the schemes are dedicated at improving the quality of assignment of workers to jobs. As a result, it is necessary to assess their impact on unemployment recurrence as well as unemployment duration. Using duration models and a very rich data set, we can identify heterogenous and time-dependent causal effects of the schemes. We find significant favorable effects on both outcomes, but the impact on unemployment recurrence is stronger than on unemployment duration. In particular, the program shifts the incidence of recurrence, one year after employment, from 33 to 26%. This illustrates that labor market policies evaluations that consider unemployment duration alone can be misleading.unemployment ; active labor market policies ; evaluation ; duration model

How do firms respond to cheaper computers? Microeconometric evidence for France based on a production function approach

The continuous innovation process experienced by the information technology industries over the last decades has caused the price of computer power to decrease dramatically. This has led many firms to invest massively in increasingly efficient computers. This paper is an attempt to assess the impact of the fall of the cost of this particular input, on the performances of firms in terms of marginal cost, aggregate labor demand and employment by skill. Unlike most studies dealing with the technological bias issue, most of which rely on the estimation of factor demand equations, our evaluation of the complementarities between computers, skilled and unskilled labor rests on the sole estimation of a production function. We define a set of parameters of interest, depending on the observations and on the structural parameters of the production function, enabling us to examine the impact of the computer price decrease on marginal cost, labor demand and the relative demand for skills. Using a panel of more than 5000 continuing French firms followed between 1994 and 1997, we estimate a translog production function and find that the effects of the decrease in the price of computers have been large, both in terms of marginal cost reduction and in terms of skill structure. A 15% fall of the computer price should lead to a decrease of around 0.7% in the marginal cost of production and to a rise of about 3.5% of the skilled to unskilled ratio, other input prices being held fixed.Computers, production function, marginal cost, factor demands, technological bias

Employed 40 Hours or Not-Employed 39: Lessons from the 1982 Mandatory Reduction of the Workweek

We use longitudinal individual wage, hours, and employment data to investigate the effect of the February 1, 1982 mandatory reduction of weekly working hours in France. Just after François Mitterrand?s election in May 1981, the government decided to increase the minimum wage by 5%. Then, as promised in its electoral program, the socialist government reduced the workweek from 40 to 39 hours. At the same time, it mandated stable monthly earnings for minimum wage workers and recommended the stabilization of monthly earnings for other workers (recommendations followed by 90% of the firms). We show that workers directly affected by these changes?those working 40 hours in March 1981 as well as those working overtime at the same date ?were more likely to lose their jobs between 1981 and 1982 than workers not affected by the changes?those working 36 to 39 hours in March 1981. Moreover, because the decree enforcing the new standard was issued faster than earlier promises, some firms had no time to complete negotiations and their workers were still working 40 hours after February 1, 1982. We show that these workers were also strongly affected by the reduction in standard hours. Our estimates of the impact of this one-hour reduction of the workweek on employment losses vary between 2% and 4%, depending on the methodology or the data used. Furthermore, we show that minimum wage workers were most affected by the changes. This result, consistent with our model, is due to the impossibility of adjusting their monthly wage, which results in excess job destruction and creation. These results should help us understand the possible effects of the upcoming mandatory reduction of hours in France, where the maximum weekly working hours declined from 39 to 35 hours beginning in January 2000. Similar programs are envisaged in other European countries, which hope that hours reductions will be an efficient policy for reducing unemployment

Sample Attrition Bias in Randomized Experiments: A Tale of Two Surveys

The randomized trial literature has helped to renew the fields of microeconometric policy evaluation by emphasizing identification issues raised by endogenous program participation. Measurement and attrition issues have perhaps received less attention. This paper analyzes the dramatic impact of sample attrition in a large job search experiment. We take advantage of two independent surveys on the same initial sample of 8, 000 persons. The first one is a long telephone survey that had a strikingly low and unbalanced response rate of about 50%. The second one is a combination of administrative data and a short telephone survey targeted at those leaving the unemployment registers; this enriched data source has a balanced and much higher response rate (about 80%). With naive estimates that neglect non responses, these two sources yield puzzlingly different results. Using the enriched administrative data as benchmark, we find evidence that estimates from the long telephone survey lack external and internal validity. We turn to existing methods to bound the effects in the presence of sample selection; we extend them to the context of randomization with imperfect compliance. The bounds obtained from the two surveys are compatible but those from the long telephone survey are somewhat uninformative. We conclude on the consequences for data collection strategies.randomized evaluation, survey non response, bounds

Sample attrition bias in randomized experiments: A tale of two surveys

The randomized trial literature has helped to renew the field of microeconometric policy evaluation by emphasizing identification issues raised by endogenous program participation. Measurement and attrition issues have perhaps received less attention. This paper analyzes the dramatic impact of sample attrition in a large job search experiment. We take advantage of two independent surveys on the same initial sample of 8,000 persons. The first one is a long telephone survey that had a strikingly low and unbalanced response rate of about 50%. The second one is a combination of administrative data and a short telephone survey targeted at those leaving the unemployment registers; this enriched data source has a balanced and much higher response rate (about 80%). With naive estimates that neglect non responses, these two sources yield puzzlingly different results. Using the enriched administrative data as benchmark, we find evidence that estimates from the long telephone survey lack external and internal validity. We turn to existing methods to bound the effects in the presence of sample selection; we extend them to the context of randomization with imperfect compliance. The bounds obtained from the two surveys are compatible but those from the long telephone survey are somewhat uninformative. We conclude on the consequences for data collection strategies.unemployment ; job search ; counselling ; attrition ; sample selection

Analyzing the Anticipation of Treatments Using Data on Notification Dates

When treatments may occur at different points in time, most evaluation methods assume – implicitly or explicitly – that all the information used by subjects about the occurrence of a future treatment is available to the researcher. This is often called the “no anticipation” assumption. In reality, subjects may receive private signals about the date when a treatment may start. We provide a methodological and empirical analysis of this issue in a setting where the outcome of interest as well as the moment of information arrival (notification) and the start of the treatment can all be characterized by duration variables. Building on the "Timing of Events" approach, we show that the causal effects of notification and of the treatment on the outcome are identified. We estimate the model on an administrative data set of unemployed workers in France which provides the date when job seekers receive information from caseworkers about their future treatment status. We find that notification has a significant and positive effect on unemployment duration. This result violates the standard "no anticipation" assumption and rules out a "threat effect" of training programs in France.evaluation of labor market programs, training, duration model, timing of events, anticipation

Active Labor Market Policy Effects in a Dynamic Setting

This paper implements a method to identify and estimate treatment effects in a dynamic setting where treatments may occur at any point in time. By relating the standard matching approach to the timing-of-events approach, it demonstrates that effects of the treatment on the treated at a given date can be identified even though non-treated may be treated later in time. The approach builds on a "no anticipation" assumption and the assumption of conditional independence between the duration until treatment and the counterfactual durations until exit. To illustrate the approach, the paper studies the effect of training for unemployed workers in France, using a rich register data set. Training has little impact on unemployment duration. The contamination of the standard matching estimator due to later entries into treatment is large if the treatment probability is high.treatment, program participation, unemployment duration, matching, training, propensity score, contamination bias

Private and public provision of counseling to job-seekers: Evidence from a large controlled experiment

Contracting out public services to private firms has ambiguous effects when quality is imperfectly observable. Using a randomized experiment over a national sample in France, we compare the efficiency of the public employment service (PES) vs. private providers in delivering very similar job-search intensive counseling. The impact of each program is assessed with respect to the standard, low intensity track offered by the PES to the unemployed. We find that job-search assistance increases exit rates to employment by 15 to 35%. But the impact of the public program is about twice as large as compared to the private program, at least during the 6 first months after random assignment. We argue that the observed contract structure with the private providers has not overcome the underlying agency problem. We find no evidence of cream-skimming: rather, it seems that profit maximizing private providers have found it optimal to enroll as many job-seekers as they could, but to make minimum effort on the placement of some of them

The perverse effects of partial employment protection reform: experience rating and French older workers

French firms laying off workers aged 50 and above have to pay a tax to the unemployment insurance system, known as the Delalande tax. This is an original case of experience rating in the European context, restricted to older workers, whose employment prospects are particularly bad. We evaluate its impact on layoff (firing) as well as on hiring, taking advantage of several changes in the measure since its introduction in 1987. We find particularly strong evidence of an adverse effect of the tax on the firms' propensity to hire older workers, thanks to a legislative change in 1992, when workers hired after the age of 50 stopped being liable for the tax. Chances to find a job increased significantly for unemployed workers older than 50, compared to workers just below 50 who remained liable for the tax. We estimate that before 1992, the tax reduced the probability that an unemployed worker aged 50 find a job by as much as 25%. Evidence on the effect on layoffs is less clear cut. The impact is sizeable only for the most stringent tax schedule, after 1998, but it is also imprecisely estimated