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  1. Inference on causal effects in a generalized Regression Kink Design
    Published: 2015
    Publisher:  IZA, Bonn

    We consider nonparametric identification and estimation in a nonseparable model where a continuous regressor of interest is a known, deterministic, but kinked function of an observed assignment variable. This design arises in many institutional... more

    Location:
    ZBW - Leibniz-Informationszentrum Wirtschaft, Standort Kiel
    Signature:
    DS 4 (8757)
    Inter-library loan:
    No inter-library loan

     

    We consider nonparametric identification and estimation in a nonseparable model where a continuous regressor of interest is a known, deterministic, but kinked function of an observed assignment variable. This design arises in many institutional settings where a policy variable (such as weekly unemployment benefits) is determined by an observed but potentially endogenous assignment variable (like previous earnings). We provide new results on identification and estimation for these settings, and apply our results to obtain estimates of the elasticity of joblessness with respect to UI benefit rates. We characterize a broad class of models in which a sharp "Regression Kink Design" (RKD, or RK Design) identifies a readily interpretable treatment-on-the-treated parameter (Florens et al. (2008)). We also introduce a "fuzzy regression kink design" generalization that allows for omitted variables in the assignment rule, noncompliance, and certain types of measurement errors in the observed values of the assignment variable and the policy variable. Our identifying assumptions give rise to testable restrictions on the distributions of the assignment variable and predetermined covariates around the kink point, similar to the restrictions delivered by Lee (2008) for the regression discontinuity design. We then use a fuzzy RKD approach to study the effect of unemployment insurance benefits on the duration of joblessness in Austria, where the benefit schedule has kinks at the minimum and maximum benefit level. Our preferred estimates suggest that changes in UI benefit generosity exert a relatively large effect on the duration of joblessness of both low-wage and high-wage UI recipients in Austria.

     
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    Content information
    Source: Union catalogues
    Language: English
    Media type: Book
    Format: Online
    Other identifier:
    hdl: 10419/107548
    Series: Discussion paper series / Forschungsinstitut zur Zukunft der Arbeit ; 8757
    Subjects: regression discontinuity design; regression kink design; treatment effects; nonseparable models; nonparametric estimation
    Scope: Online-Ressource (39, [51] S.), graph. Darst.
  2. What do data on millions of US workers reveal about life-cycle earnings risk?
    Published: 2015
    Publisher:  Federal Reserve Bank of New York, New York, NY

    We study the evolution of individual labor earnings over the life cycle, using a large panel data set of earnings histories drawn from U.S. administrative records. Using fully nonparametric methods, our analysis reaches two broad conclusions. First,... more

    Location:
    ZBW - Leibniz-Informationszentrum Wirtschaft, Standort Kiel
    Signature:
    DS 207 (710)
    Inter-library loan:
    No inter-library loan

     

    We study the evolution of individual labor earnings over the life cycle, using a large panel data set of earnings histories drawn from U.S. administrative records. Using fully nonparametric methods, our analysis reaches two broad conclusions. First, earnings shocks display substantial deviations from lognormality - the standard assumption in the literature on incomplete markets. In particular, earnings shocks display strong negative skewness and extremely high kurtosis - as high as 30 compared with 3 for a Gaussian distribution. The high kurtosis implies that, in a given year, most individuals experience very small earnings shocks, and a small but non-negligible number experience very large shocks. Second, these statistical properties vary significantly both over the life cycle and with the earnings level of individuals. We also estimate impulse response functions of earnings shocks and find important asymmetries: Positive shocks to high-income individuals are quite transitory, whereas negative shocks are very persistent; the opposite is true for low-income individuals. Finally, we use these rich sets of moments to estimate econometric processes with increasing generality to capture these salient features of earnings dynamics.

     
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    Content information
    Source: Union catalogues
    Language: English
    Media type: Book
    Format: Online
    Other identifier:
    hdl: 10419/120829
    Series: Staff report / Federal Reserve Bank of New York ; 710
    Subjects: Lohn; Schock; Einkommen; Risiko; Lebensverlauf; Verdienstausfall; Schätzung; USA; earnings dynamics; life-cycle earnings risk; nonparametric estimation; kurtosis; skewness; non-Gaussian shocks; normal mixture
    Scope: Online-Ressource ([1], 70 S.), graph. Darst.