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Robustness of the encouragement design in a two-treatment randomized control trial

  • Luc Behaghel

    (PSE - Paris-Jourdan Sciences Economiques - CNRS : UMR8545 - École des Hautes Études en Sciences Sociales (EHESS) - École des Ponts ParisTech (ENPC) - École normale supérieure [ENS] - Paris - Institut national de la recherche agronomique (INRA), EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris, CREST - Centre de Recherche en Économie et Statistique - INSEE - École Nationale de la Statistique et de l'Administration Économique)

  • Bruno Crépon

    (CREST - Centre de Recherche en Économie et Statistique - INSEE - École Nationale de la Statistique et de l'Administration Économique)

  • Marc Gurgand

    (PSE - Paris-Jourdan Sciences Economiques - CNRS : UMR8545 - École des Hautes Études en Sciences Sociales (EHESS) - École des Ponts ParisTech (ENPC) - École normale supérieure [ENS] - Paris - Institut national de la recherche agronomique (INRA), EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris, CREST - Centre de Recherche en Économie et Statistique - INSEE - École Nationale de la Statistique et de l'Administration Économique)

In this paper we discuss how the " encouragement design "used in randomized controlled trials can be extended to a setting with two treatments and one control group. Conditions to interpret the Two-Stage Least Squares (TSLS) estimates causally are stronger than in the case with only one treatment and one control group. A rst case where a causal interpretation holds is when only those assigned to one of the two treatments can e ectively enter the corresponding program. A second case is when there are always takers. In that second case, entry rates into a given program should be the same among those assigned to the control group and those assigned to the other program; this restriction can be tested from the data. In cases where the restriction is rejected, we derive bounds to the Local Average Treatment E ect (LATE) based on weaker monotonicity conditions. We illustrate the results using data from a large randomized experiment where job seekers at risk of long term unemployment can receive a reinforced counseling scheme o ered either by the public or the private sector, or remain on a standard track.

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Paper provided by HAL in its series PSE Working Papers with number halshs-00834169.

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Date of creation: Jun 2013
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Handle: RePEc:hal:psewpa:halshs-00834169
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