Exogenous Treatment and Endogenous Factors: Vanishing of Omitted Variable Bias on the Interaction Term
AbstractWhether interested in the differential impact of a particular factor in various institutional settings or in the heterogeneous effect of policy or random experiment, the empirical researcher confronts a problem if the factor of interest is correlated with an omitted variable. This paper presents the circumstances under which it is possible to arrive at a consistent estimate of the mentioned effect. We find that if the source of heterogeneity and omitted variable are jointly independent of policy or treatment, then the OLS estimate on the interaction term between the treatment and endogenous factor turns out to be consistent.
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Bibliographic InfoPaper provided by Kyiv School of Economics in its series Discussion Papers with number 37.
Date of creation: Mar 2011
Date of revision:
Note: Revised and resubmitted to the Journal of Econometric Methods
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treatment effect; heterogeneity; policy evaluation; random experiments; omitted variable bias;
Other versions of this item:
- Nizalova, Olena Y. & Murtazashvili, Irina, 2012. "Exogenous Treatment and Endogenous Factors: Vanishing of Omitted Variable Bias on the Interaction Term," IZA Discussion Papers 6282, Institute for the Study of Labor (IZA).
- C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
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