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Unconditional effects of general policy interventions

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Listed:
  • Martínez-Iriarte, Julián
  • Montes-Rojas, Gabriel
  • Sun, Yixiao

Abstract

This paper studies the unconditional effects of a general policy intervention, which includes location-scale shifts and simultaneous shifts as special cases. The location-scale shift is intended to study a counterfactual policy aimed at changing not only the mean or location of a covariate but also its dispersion or scale. The simultaneous shift refers to the situation where shifts in two or more covariates take place simultaneously. For example, a shift in one covariate is compensated at a certain rate by a shift in another covariate. Not accounting for these possible scale or simultaneous shifts will result in an incorrect assessment of the potential policy effects on an outcome variable of interest. The unconditional policy parameters are estimated with simple semiparametric estimators, for which asymptotic properties are studied. Monte Carlo simulations are implemented to study their finite sample performances. The proposed approach is applied to a Mincer equation to study the effects of changing years of education on wages and to study the effect of smoking during pregnancy on birth weight.

Suggested Citation

  • Martínez-Iriarte, Julián & Montes-Rojas, Gabriel & Sun, Yixiao, 2024. "Unconditional effects of general policy interventions," Journal of Econometrics, Elsevier, vol. 238(2).
    • Handle: RePEc:eee:econom:v:238:y:2024:i:2:s0304407623002865
    DOI: 10.1016/j.jeconom.2023.105570
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    References listed on IDEAS

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    1. Robert F. Engle & Simone Manganelli, 2004. "CAViaR: Conditional Autoregressive Value at Risk by Regression Quantiles," Journal of Business & Economic Statistics, American Statistical Association, vol. 22, pages 367-381, October.
    2. David H. Autor & Lawrence F. Katz & Melissa S. Kearney, 2005. "Rising Wage Inequality: The Role of Composition and Prices," NBER Working Papers 11628, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Julian Martinez-Iriarte & YiXiao Sun, 2022. "Identification and Estimation of Unconditional Policy Effects of an Endogenous Binary Treatment: an Unconditional MTE Approach," Working Papers 131, Red Nacional de Investigadores en Economía (RedNIE).

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    More about this item

    Keywords

    Location-scale shift; Quantile regression; Simultaneous shift; Unconditional policy effect; Unconditional regression;
    All these keywords.

    JEL classification:

    • J01 - Labor and Demographic Economics - - General - - - Labor Economics: General
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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