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

We estimate a semiparametric single-risk discrete-time duration model to assess the effect of vocational training on the duration of unemployment spells. The data basis used in this study is the German Socio-Economic- Panel (GSOEP) for West Germany for the period from 1986 to 1994. To take into account a possible selection bias ac-tual participation in vocational training is instrumented using estimates of a random-effects probit model for the participation in qualification measures. Our main results show that training does have a significant short term effect of reducing unemploy-ment duration but that this effect does not persist in the long run.