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Relaxing monotonicity in the identification of local average treatment effects

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  • Huber, Martin

    ()

  • Mellace, Giovanni

    ()

Abstract

In heterogeneous treatment effect models with endogeneity, the identification of the local average treatment effect (LATE) typically relies on an instrument that satisfies two conditions: (i) joint independence of the potential post-instrument variables and the instrument and (ii) monotonicity of the treatment in the instrument, see Imbens and Angrist (1994). We show that identification is still feasible when replacing monotonicity by a strictly weaker local monotonicity condition. We demonstrate that the latter allows identifying the LATEs on the (i) compliers (whose treatment reacts to the instrument in the intended way), (ii) defiers (who react counter-intuitively), and (iii) both populations jointly. Furthermore, (i) and (iii) coincides with standard LATE if monotonicity holds. We also present an application to the quarter of birth instrument of Angrist and Krueger (1991).

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Bibliographic Info

Paper provided by University of St. Gallen, School of Economics and Political Science in its series Economics Working Paper Series with number 1212.

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Length: 48 pages
Date of creation: May 2012
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Handle: RePEc:usg:econwp:2012:12

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Keywords: Instrumental variable; treatment effects; LATE; local monotonicity;

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  1. Andrews, Donald W K, 1994. "Asymptotics for Semiparametric Econometric Models via Stochastic Equicontinuity," Econometrica, Econometric Society, Econometric Society, vol. 62(1), pages 43-72, January.
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  3. Klein, T.J., 2008. "Heterogeneous Treatment Effects: Instrumental Variables Without Monotonicity?," Discussion Paper, Tilburg University, Center for Economic Research 2008-45, Tilburg University, Center for Economic Research.
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  7. Joshua D. Angrist & Guido W. Imbens, 1995. "Identification and Estimation of Local Average Treatment Effects," NBER Technical Working Papers, National Bureau of Economic Research, Inc 0118, National Bureau of Economic Research, Inc.
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Cited by:
  1. repec:hal:wpaper:halshs-00699646 is not listed on IDEAS
  2. Clément de Chaisemartin, 2012. "Late again, whithout Monotonicity," Working Papers, Centre de Recherche en Economie et Statistique 2012-12, Centre de Recherche en Economie et Statistique.
  3. de Chaisemartin, Clement, 2013. "Defying the LATE? Identification of local treatment effects when the instrument violates monotonicity," The Warwick Economics Research Paper Series (TWERPS), University of Warwick, Department of Economics 1020, University of Warwick, Department of Economics.
  4. Clément De Chaisemartin & Xavier D'Haultfoeuille, 2012. "Late Again with Defiers," PSE Working Papers, HAL halshs-00699646, HAL.

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