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Defying the LATE? Identification of local treatment effects when the instrument violates monotonicity

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  • de Chaisemartin, Clement

    (Department of Economics, University of Warwick)

Abstract

The instrumental variable method relies on strong "no-defiers" condition, which requires that the instrument affect every subject's treatment decision in the same direction. This paper shows that "no-defiers" can be replaced by a weaker "compliers-defiers" condition, which requires that a subgroup of compliers have the same size and the same distribution of potential outcomes as defiers. This condition is necessary and sufficient for IV to capture causal effects for the reamining part of compliers. In many applications, "compliers-defiers" is a very weak condition. For instance, in Angrist & Evans (1998), 94% of DGPs compatible with the data satisfy "compliers-defiers", while 0% satisfy "no-defiers". JEL classification: Instrumental variable ; heterongeneous effects ; defiers ; single index model JEL codes: C21; C26

Suggested Citation

  • de Chaisemartin, Clement, 2013. "Defying the LATE? Identification of local treatment effects when the instrument violates monotonicity," The Warwick Economics Research Paper Series (TWERPS) 1020, University of Warwick, Department of Economics.
    • Handle: RePEc:wrk:warwec:1020
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • C26 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Instrumental Variables (IV) Estimation

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