Faculty of Economics and Business Administration Publications Database

Estimating the Effect of Vocational Training on Unemployment Duration in West Germany: A Discrete Hazard Rate Model with Instrumental Variables

Maurer, Kai-Oliver
Wellner, Marc
Volume: 218
Number: 1
Pages: 619 - 646
ISSN-Print: 2366-049X
Link External Source: Online Version
Year: 1999

This paper is concerned with the effect of vocational training on individual unemployment duration in West Germany. The database used in this study is the German Socio-Economic Panel (GSOEP) for West Germany for the period from 1984 to 1994. The econometric model is a semi-parametric single risk discrete time duration model. To take into account a possible selection bias, an instrumental variable for actual participation in vocational training is used. This instrumental variable is the predicted participation propensity obtained by estimating a probit model for the participation in vocational training measures. The main results show that prior participation does have a significant effect on the reduction of unemployment duration in the short run. However, this effect does not persist in the long run.