st: Survival Analysis: How to solve the problem of endogeneity of an explanatory variable

["Ingrid Hohenleitner" <hohenleitner@hwwi.org>]

Dear community,

I am working on a problem in survival analysis, trying to find out the
difference in transition rate from unemployment to employment (<- time to
event), between two groups: people who are sanctioned, and those who are not
sanctioned.   Where ?sanctioned? means that the amount of unemployment
benefit payment is reduced for a certain period as a punishment, for example
if the unemployed does not show enough effort to search a job. The
probability of being sanctioned as well as the probability to find a job
depends on unobserved characteristics like a person?s attitude to work.

Thus, I face the problem that the variable ?sanctioned? is dependent upon
observed as well as of unobserved determinants. And furthermore, the
explanatory variable ?sanctioned? is endogenous and the process of being
sanctioned is not exogenous with respect to the transition from unemployment
to employment.

I am not an expert in STATA and was wondering how to deal with this problem.
Should I handle the problem by simultaneously modeling two parallel
processes, the sanctioning and the transition-into-employment process; or by
some other way?
In either case, can you suggest me the inbuilt STATA commands, or freely
available routines that I can use to address this problem.

I would be very grateful for your help,
Ingrid Hohenleitner



Hamburgisches WeltWirtschaftsInstitut gemeinnützige GmbH (HWWI)
Hamburg Institute of International Economics (HWWI)
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