Stratified Partial Likelihood for Externality Identification

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In Simple Words

Imagine tracking runners in two different high schools across two different semesters. To figure out if a mandatory training program in School A hurt the non-trained runners on the same track, comparing trained versus untrained runners in School A is insufficient. Untrained runners in School A must be compared to runners in School B across both semesters, controlling for overall weather changes across semesters without assuming how fast runners normally tire out.

Nonparticipants observed across Danish counties

Counties without the trial
Trend comparison group
Counties with the activation trial
Exit rate about 5% lower

Pre-trial-adjusted county comparison. Counties were not randomly selected; overall estimate was marginally significant, not a guaranteed 5% loss.

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Research question

Standard duration models evaluate job search assistance by comparing participants and non-participants within the same region, failing to identify treatment spillovers because non-participants' baseline hazard rates are contaminated by program externalities.

Participants

N = 89,466 unemployed benefit spells (40,403 experiment period, 49,063 pre-experiment period) across 14 Danish counties.

Study Design

Stratified partial likelihood proportional hazard estimation comparing non-participants in trial counties (Storstrøm and South Jutland) to comparison counties, stratifying duration dependence by calendar cohort.

Results

Participation in the activation program reduced non-participants' unemployment exit hazard rate by approximately 5% ($\gamma = -0.048$, p < 0.10 in full covariate model; $\gamma = -0.079$, p < 0.05 in South Jutland sub-sample).

Takeaway

Apply stratified partial likelihood proportional hazard models using non-experiment comparison regions to isolate non-treated spillover effects without imposing parametric hazard assumptions.

Source and citation

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