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Structural Equations, Treatment Effects and Econometric Policy Evaluation

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  • James J. Heckman
  • Edward Vytlacil

Abstract

This paper uses the marginal treatment effect (MTE) to unify the nonparametric literature on treatment effects with the econometric literature on structural estimation using a nonparametric analog of a policy invariant parameter; to generate a variety of treatment effects from a common semiparametric functional form; to organize the literature on alternative estimators; and to explore what policy questions commonly used estimators in the treatment effect literature answer. A fundamental asymmetry intrinsic to the method of instrumental variables is noted. Recent advances in IV estimation allow for heterogeneity in responses but not in choices, and the method breaks down when both choice and response equations are heterogeneous in a general way.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 11259.

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Date of creation: Apr 2005
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Publication status: published as Heckman, James J. and Edward Vytlacil. "Structural Equations, Treatment Effects, And Econometric Policy Evaluation," Econometrica, v73(3,May), 2005, 669-738.
Handle: RePEc:nbr:nberwo:11259

Note: ED LS PE CH
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  1. James Heckman, 1997. "Instrumental Variables: A Study of Implicit Behavioral Assumptions Used in Making Program Evaluations," Journal of Human Resources, University of Wisconsin Press, vol. 32(3), pages 441-462.
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