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Robustness of the Encouragement Design in a Two-Treatment Randomized Control Trial

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  • Behaghel, Luc

    ()
    (Paris School of Economics)

  • Crépon, Bruno

    ()
    (CREST)

  • Gurgand, Marc

    ()
    (Paris School of Economics)

Abstract

In this paper we discuss how the "encouragement design" used in randomized controlled trials can be extended to a setting with two treatments and one control group. Conditions to interpret the Two-Stage Least Squares (TSLS) estimates causally are stronger than in the case with only one treatment and one control group. A first case where a causal interpretation holds is when only those assigned to one of the two treatments can effectively enter the corresponding program. A second case is when there are always takers. In that second case, entry rates into a given program should be the same among those assigned to the control group and those assigned to the other program; this restriction can be tested from the data. In cases where the restriction is rejected, we derive bounds to the Local Average Treatment Effect (LATE) based on weaker monotonicity conditions. We illustrate the results using data from a large randomized experiment where job seekers at risk of long term unemployment can receive a reinforced counseling scheme offered either by the public or the private sector, or remain on a standard track.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 7447.

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Length: 13 pages
Date of creation: Jun 2013
Date of revision:
Handle: RePEc:iza:izadps:dp7447

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Keywords: randomized evaluation; local average treatment effect; bounds;

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  1. David S. Lee, 2009. "Training, Wages, and Sample Selection: Estimating Sharp Bounds on Treatment Effects," Review of Economic Studies, Oxford University Press, vol. 76(3), pages 1071-1102.
  2. Behaghel, Luc & Crépon, Bruno & Gurgand, Marc, 2012. "Private and Public Provision of Counseling to Job-Seekers: Evidence from a Large Controlled Experiment," IZA Discussion Papers 6518, Institute for the Study of Labor (IZA).
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