Econometrics
Working papers
Lombardi S, G van den Berg and J Vikström (2020), "Empirical Monte Carlo Evidence on Estimation of Timing-of-Events Models", IFAU Working paper 2020:26.
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.
Publications
G.J. van den Berg and J. Vikström (2021), "Long-Run Effects of Dynamically Assigned Treatments: A New Methodology and an Evaluation of Training Effects on Earnings", Econometrica, forthcoming.
Abstract: We propose and implement a new method to estimate treatment effects in settings where individuals need to be in a certain state (e.g. unemployment) to be eligible for a treatment, treatments may commence at different points in time, and the outcome of interest is realized after the individual left the initial state. An example concerns the effect of training on earnings in subsequent employment. Any evaluation needs to take into account that some of those who are not trained at a certain time in unemployment will leave unemployment before training while others will be trained later. We are interested in effects of the treatment at a certain elapsed duration compared to ``no treatment at any subsequent duration''. We prove identification under unconfoundedness and propose inverse probability weighting estimators. A key feature is that weights given to outcome observations of non-treated depend on the remaining time in the initial state. We study effects of a training program for unemployed workers in Sweden. Estimates are positive and sizeable, exceeding those obtained with common static methods. This calls for a reappraisal of training as a tool to bring unemployed back to work.
Vikström J., G. Ridder and M. Weidner (2018), "Bounds on treatment effects on transitions", Journal of Econometrics, 205(2), 448-469.
Abstract: This paper considers the identification of treatment effects on conditional transition probabilities. We show that even under random assignment only the instantaneous average treatment effect is point identified. Since treated and control units drop out at different rates, randomization only ensures the comparability of treatment and controls at the time of randomization, so that long-run average treatment effects are not point identified. Instead, we derive bounds on these average effects. Our bounds do not impose (semi)parametric restrictions, for example, proportional hazards. We also explore assumptions such as monotone treatment response, common shocks and positively correlated outcomes that tighten the bounds.
Farbmacher H., R. Guber and J. Vikström (2018), "Increasing the credibility of the twin birth instrument", Journal of Applied Econometrics, 33(3), 457-472.
Abstract: Twin births are an important instrument for the endogenous fertility decision. However, twin births are not exogenous either as dizygotic twinning is correlatedwithmaternal characteristics. Following themedical literature, we assume that monozygotic twins are exogenous, and construct a new instrument, which corrects for the selection although monozygotic twinning is usually unobserved in survey and administrative datasets. Using administrative data from Sweden ,we show that the usual twin instrument is related to observed and unobserved determinants of economic outcomes, while our new instrument is not. In our applications we find that the classical twin instrument underestimates the negative effect of fertility on labor income. This finding is in line with the observation that high earners are more likely to delay childbearing and hence have a higher risk to get dizygotic twins.
Vikström J. (2017), "IPW estimation and related estimators for evaluation of active labor market policies in a dynamic setting", Labour Economics, 49, 42-54.
Abstract: This paper considers treatment evaluation in a discrete time setting in which treatment can start at any point in time. We consider evaluation under unconfoundedness and propose a dynamic inverse probability weighting estimator. A typical application is an active labor market program that can start after any elapsed unemploy- ment duration. The identification and estimation results concern both cases with one single treatment as well as sequences of programs. The new estimator is applied to Swedish data on participants in a training program and a work practice program. The work practice program increases re-employment rates. Most sequences of the two programs are inefficient when compared to one single program episode.