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

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

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; training; propensity score; matching; contamination bias

Evaluation of payroll tax subsidies for low-wage workers

In this article, we study the impact of payroll tax subsidies for low-wage workers on various outcomes of the firms, including employment, in particular that of young and less skilled workers. We concentrate on the effects of the 1995 and 1996 tax cuts policies, which permit large decreases in employer-paid contributions compared with the 1993 original policy. To distinguish between firms that are more or less concerned by these reductions, we compute for each firm in 1994 the changes in total labor costs, which are solely due to the changes in the tax reductions between 1994 and 1997. This variable lies between 0 and 10%, depending on the proportion of low wage workers in the firm in 1994. This paper includes an important methodology part. It refers to the statistical framework of Rubin (1974, 1977, 1983) and Heckman, Ichimura and Todd (1997, 1998, 1999), appropriate for the evaluation of a unique treatment, like participation in a training program. For identifying the effects of the firms ex ante labor cost reduction, we adapt the formalism to the case where the economic policies involve an infinite number of possible treatments. We also propose an estimation method based on the implementation of nonparametric series estimators. The empirical analysis makes use of matched employer-employee information originating from two main sources of data, the Déclarations Annuelles de Données Sociales (DADS) and the Bénéfices réels normaux (BRN). We find that, between 1994 and 1997, tax reductions are associated with very strong employment and wages effects in the economy. We also find that they permit the creation or the save of roughly 400.000 works, even though this estimate is rather imprecise because of the methodology.Total labor costs, Tax subsidies, matched employer-employee data, selection bias, econometric evaluation methods, semiparametric estimation, series estimators, continuous treatment

Taxation, user cost of capital and factor demand

In this paper we analyze the impact on the demand of capital and labour of changes in their relative costs, using micro data. We especially highlight the role of the user cost of capital, for which we propose an original measure based on the cost of debt and the cost of equity. We hence take advantage of changes in the taxation of capital to build instrument variables and to estimate a complete system of factor demands. First we find that the elasticity of substitution between capital and labour is relatively weak in the non manufacturing sector, about 0,4, whereas this parameter range from 0.6 to 0,8 in the manufacturing sector. Secondly, we show that the price elasticity of the demand for goods is quite high, and is almost equal to 2 in both industries. Thirdly and probably the most interesting result, we find a significant and direct relationship between the user cost of capital and the stock of capital, which does not appear in most former studies on French data. In a standard model of factor demand, our results mean that the wealth effect dominates the substitution effect. As a result, lowering the user cost of capital would lead, at partial equilibrium, to increase not only investment but also the employment level and output.Taxation, user cost of capital, factor demand, firm data