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Estimating Distributions of Treatment Effects with an Application to the Returns to Schooling and Measurement of the Effects of Uncertainty on College

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  • Pedro Carneiro
  • Karsten T. Hansen
  • James J. Heckman

Abstract

This paper uses factor models to identify and estimate distributions of counterfactuals. We extend LISREL frameworks to a dynamic treatment effect setting, extending matching to account for unobserved conditioning variables. Using these models, we can identify all pairwise and joint treatment effects. We apply these methods to a model of schooling and determine the intrinsic uncertainty facing agents at the time they make their decisions about enrollment in school. Reducing uncertainty in returns raises college enrollment. We go beyond the Veil of Ignorance' in evaluating educational policies and determine who benefits and who loses from commonly proposed educational reforms.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 9546.

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Date of creation: Mar 2003
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Publication status: published as Carneiro, Pedro, Karsten T. Hansen and James J. Heckman. "2001 Lawrence R. Klein Lecture Estimating Distributions Of Treatment Effects With An Application To The Returns To Schooling And Measurement Of The Effects Of Uncertainty On College Choice," International Economic Review, 2003, v44(2,May), 631-422.
Handle: RePEc:nbr:nberwo:9546

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  23. Keane, Michael P & Wolpin, Kenneth I, 1997. "The Career Decisions of Young Men," Journal of Political Economy, University of Chicago Press, vol. 105(3), pages 473-522, June.
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