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Sensitivity of Policy‐Relevant Treatment Parameters to Violations of Monotonicity

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  • Luther Yap

Abstract

This paper proposes a method to bound policy‐relevant treatment parameters (PRTPs) when the monotonicity assumption that the IV affects individuals' treatment response in the same direction is weakened. The bounding framework uses the proportion of defiers relative to compliers as a sensitivity parameter and yields an identified set that is an interval. The method is illustrated in an empirical application where the same‐sex instrument was used to calculate the effect of having a third child on labor force participation. I find that bounds are informative only for small violations in monotonicity.

Suggested Citation

  • Luther Yap, 2025. "Sensitivity of Policy‐Relevant Treatment Parameters to Violations of Monotonicity," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 40(6), pages 627-638, September.
    • Handle: RePEc:wly:japmet:v:40:y:2025:i:6:p:627-638
    DOI: 10.1002/jae.3132
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    References listed on IDEAS

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    1. Nadja van ’t Hoff & Arthur Lewbel & Giovanni Mellace, 2023. "Limited Monotonicity and the Combined Compliers LATE," Boston College Working Papers in Economics 1059, Boston College Department of Economics, revised 20 Jan 2025.
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    Cited by:

    1. Ricardo E. Miranda, 2026. "On the falsification of instrumental variable models for heterogeneous treatment effects," Papers 2601.14464, arXiv.org.

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