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Title: Identifying Treatment Effects in the Presence of Confounded Types
Resulting in 1 citation.
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Kedagni, Desire |
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Identifying Treatment Effects in the Presence of Confounded Types Journal of Econometrics published online (5 June 2021): DOI: 10.1016/j.jeconom.2021.01.012. Also:https://www.sciencedirect.com/science/article/pii/S0304407621001512 Cohort(s): Young Men Publisher: Elsevier Keyword(s): College Degree; Educational Returns; Modeling, Instrumental Variables; Statistical Analysis; Wages In this paper, I consider identification of treatment effects when the treatment is endogenous. The use of instrumental variables is a popular solution to deal with endogeneity, but this may give misleading answers when the instrument is invalid. I show that when an (unobserved) instrument is invalid due to correlation with the first stage unobserved heterogeneity, a proxy for the instrument helps partially identify not only the local average treatment effect, but also the entire potential outcomes distributions for compliers. I exploit the fact that the distribution of the observed outcome in each group defined by the treatment and the instrument is a mixture of the distributions of interest. I write the identified set in the form of conditional moment inequalities, and provide an easily implementable inference procedure. Under some tail restrictions, the potential outcomes distributions are point-identified for compliers. Finally, I illustrate my methodology on data from the National Longitudinal Survey of Young Men to estimate returns to college using college proximity as a proxy for the instrument low college cost. I find that a college degree increases the average hourly wage of the compliers by 15%-30%. |
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Bibliography Citation
Kedagni, Desire. "Identifying Treatment Effects in the Presence of Confounded Types." Journal of Econometrics published online (5 June 2021): DOI: 10.1016/j.jeconom.2021.01.012. Also:https://www.sciencedirect.com/science/article/pii/S0304407621001512.
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