Dynamic Treatment Assignment – The Consequences for Evaluations Using Observational Data

Dynamic Treatment Assignment – The Consequences for Evaluations Using Observational Data This paper discusses the evaluation problem using observational data when the timing of treatment is an outcome of a stochastic process. We show that the duration framework in discrete time provides a fertile ground for effect evaluations. We suggest easy-to-use nonparametric survival function matching estimators. These estimators can be used to estimate the time profile of the treatment. We apply one of the estimators to evaluate the effects of an employment subsidies program. The longer run program effects are positive. The estimated time profile suggests locking-in effects while participating in the program and a big upward jump in the employment hazard upon program completion. JEL Classification: C14, C41