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Treatment Effects for Discrete Outcomes when Responses to Treatment Vary Among Observationally Identical Persons: An Application to Norwegian ..

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Author Info
Arild Aakvik
James J. Heckman
Edward J. Vytlacil

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Abstract

This paper formulates an econometric framework for studying the impact of interventions on discrete outcomes when responses to treatment vary among observationally identical persons. Using a latent variable model that can be linked to well-posed economic models, we show how to define and interpret the average treatment effects, the average effect of treatment on the treated, the marginal treatment effect and the distribution of treatment effects for discrete outcomes. To estimate these parameters and the distribution of treatment effects, we formulate and estimate a discrete choice model with unobservables generated by a factor structure model. We apply our methods to evaluate the effect of Norwegian Vocational Rehabilitation training programs on employment outcomes for women. We find that applicants to these programs who participate in active training have a 4.6% higher employment rate than nonparticipants. When we control for the observable characteristics of applicants, we find that the average treatment effects falls to 4.1%. When we control for the unobservables characteristics of applicants, the average treatment effect falls to -1.4% and effect of treatment on the treated is -11%. We also find evidence of substantial heterogeneity in response to training.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Technical Working Papers with number 0262.

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Date of creation: Sep 2000
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Handle: RePEc:nbr:nberte:0262

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Find related papers by JEL classification:
C50 - Mathematical and Quantitative Methods - - Econometric Modeling - - - General
H43 - Public Economics - - Publicly Provided Goods - - - Project Evaluation; Social Discount Rate

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

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  3. James J. Heckman & Edward J. Vytlacil, 2000. "Local Instrumental Variables," NBER Technical Working Papers 0252, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  6. Heckman, James J. & Robb, Richard Jr., 1985. "Alternative methods for evaluating the impact of interventions : An overview," Journal of Econometrics, Elsevier, vol. 30(1-2), pages 239-267. [Downloadable!] (restricted)
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  10. Joshua Angrist, 1999. "Estimation of Limited-Dependent Variable Models with Dummy Endogenous Regressors: Simple Strategies for Empirical Practice," Working papers 99-31, Massachusetts Institute of Technology (MIT), Department of Economics.
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  13. Joshua D. Angrist & Kathryn Graddy & Guido W. Imbens, 1995. "Non-Parametric Demand Analysis with an Application to the Demand for Fish," NBER Technical Working Papers 0178, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  14. Card, David & Sullivan, Daniel G, 1988. "Measuring the Effect of Subsidized Training Programs on Movements in and out of Employment," Econometrica, Econometric Society, vol. 56(3), pages 497-530, May. [Downloadable!] (restricted)
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  15. LaLonde, Robert J, 1995. "The Promise of Public Sector-Sponsored Training Programs," Journal of Economic Perspectives, American Economic Association, vol. 9(2), pages 149-68, Spring. [Downloadable!] (restricted)
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  17. Edward Vytlacil, 2002. "Independence, Monotonicity, and Latent Index Models: An Equivalence Result," Econometrica, Econometric Society, vol. 70(1), pages 331-341, January. [Downloadable!] (restricted)
  18. Heckman, James J. & Vytlacil, Edward J., 2000. "The relationship between treatment parameters within a latent variable framework," Economics Letters, Elsevier, vol. 66(1), pages 33-39, January. [Downloadable!] (restricted)
  19. Butler, J S & Moffitt, Robert, 1982. "A Computationally Efficient Quadrature Procedure for the One-Factor Multinomial Probit Model," Econometrica, Econometric Society, vol. 50(3), pages 761-64, May. [Downloadable!] (restricted)
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  22. Xiaohong Chen & James J. Heckman & Edward Vytlacil, 2000. "Identification and SQRT N Efficient Estimation of Semiparametric Panel Data Models with Binary Dependent Variables and a Latent Factor," Econometric Society World Congress 2000 Contributed Papers 1567, Econometric Society. [Downloadable!]
  23. James J. Heckman & Lance Lochner & Christopher Taber, 1998. "Explaining Rising Wage Inequality: Explorations with a Dynamic General Equilibrium Model of Labor Earnings with Heterogeneous Agents," NBER Working Papers 6384, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  24. Ham, John C & LaLonde, Robert J, 1996. "The Effect of Sample Selection and Initial Conditions in Duration Models: Evidence from Experimental Data on Training," Econometrica, Econometric Society, vol. 64(1), pages 175-205, January. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Aakvik, Arild & Salvanes, Kjell G & Vaage, Kjell, 2003. "Measuring Heterogeneity in the Returns to Education in Norway Using Educational Reforms," CEPR Discussion Papers 4088, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  2. Andrén , Daniela & Andrén, Thomas, 2002. "Assessing the Employment Effects of Labor Market Training Programs in Sweden," Working Papers in Economics 70, Göteborg University, Department of Economics. [Downloadable!]
  3. Aakvik, Arild & Holmås, Tor Helge & Kjerstad, Egil, 2002. "A low-key social insurance reform - treatment effects for back pain patients in Norway," Working paper Series 0207, Department of Economics, University of Bergen. [Downloadable!]
  4. Armin Falk & Rafael Lalive & Josef Zweimüller, . "The Sucess of Job Applications: A New Approach to Program Evaluation," IEW - Working Papers iewwp131, Institute for Empirical Research in Economics - IEW. [Downloadable!]
    Other versions:
  5. Andrén, Thomas & Andrén, Daniela, 2004. "Assessing The Employment Effects Of Vocational Training Using A One-Factor Model," Working Papers in Economics 133, Göteborg University, Department of Economics. [Downloadable!]
    Other versions:
  6. Jan Høgelund & Anders Holm, . "Returning Long-Term Sick-Listed to Work - The effects of education in a competing risk model with time varying covariates and unobserved heterogeneity," CAM Working Papers 2002-03, University of Copenhagen. Department of Economics. Centre for Applied Microeconometrics. [Downloadable!]
  7. Michael B. Coelli & David A. Green & William P. Warburton, 2004. "Breaking the cycle? The effect of education on welfare receipt among children of welfare recipients," IFS Working Papers W04/14, Institute for Fiscal Studies. [Downloadable!]
    Other versions:
  8. Zhang, Tao, 2003. "Identifying treatment effects of active labour market programmes for Norwegian adults," Memorandum 26/2003, Oslo University, Department of Economics. [Downloadable!]
  9. Pedro Carneiro, 2003. "Evaluating Education Policies when the Rate of Return Varies Across Individuals," Cuadernos de Economía (Latin American Journal of Economics), Instituto de Economía. Pontificia Universidad Católica de Chile., vol. 40(121), pages 516-529. [Downloadable!]
  10. Markus Jochmann & Winfried Pohlmeier, 2004. "The Causal Effect of Overqualification on Earnings : Evidence from a Bayesian Approach," Working Papers of the Research Group Heterogenous Labor 04-06, Research Group Heterogeneous Labor, University of Konstanz/ZEW Mannheim. [Downloadable!]
  11. Lokshin, Michael & Glinskaya, Elena, 2008. "The effect of male migration for work on employment patterns of females in nepal," Policy Research Working Paper Series 4757, The World Bank. [Downloadable!]
  12. Mark Dusheiko & Hugh Gravelle & Rowena Jacobs, 2004. "The effect of practice budgets on patient waiting times: allowing for selection bias," Health Economics, John Wiley & Sons, Ltd., vol. 13(10), pages 941-958. [Downloadable!]
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