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Treatment Evaluation in the Case of Interactions within Markets

  • Ferracci, Marc



  • Jolivet, Grégory


    (University of Bristol)

  • van den Berg, Gerard J.


    (University of Mannheim)

We extend the standard evaluation framework to allow for interactions between individuals within segmented markets. An individual's outcome depends not only on the assigned treatment status but also on (features of) the distribution of the assigned treatments in his market. To evaluate how the distribution of treatments within a market causally affects the average effect within the market, averaged over the full population, we develop an identification and estimation method in two steps. The first one focuses on the distribution of the treatment within markets and between individuals and the second step addresses the distribution of the treatment between markets. We apply our method to data on training programs for unemployed workers in France. We use a rich administrative register of unemployment and training spells as well as the information on local labor demand that is used by unemployment agencies to allocate training programs. The results show that the average treatment effect on the employment rate causally decreases with respect to the proportion treated in the market. Our analysis accounts for unobserved heterogeneity between markets (using the longitudinal dimension of the data) and, in a robustness check, between individuals.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 4700.

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Length: 42 pages
Date of creation: Jan 2010
Date of revision:
Handle: RePEc:iza:izadps:dp4700
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  1. Crépon, Bruno & Ferracci, Marc & Jolivet, Grégory & van den Berg, Gerard J., 2009. "Active labor market policy effects in a dynamic setting," Working Paper Series 2009:1, IFAU - Institute for Evaluation of Labour Market and Education Policy.
  2. repec:oup:restud:v:64:y:1997:i:4:p:605-54 is not listed on IDEAS
  3. Crépon, Bruno & Ferracci, Marc & Fougère, Denis, 2007. "Training the Unemployed in France: How Does It Affect Unemployment Duration and Recurrence?," IZA Discussion Papers 3215, Institute for the Study of Labor (IZA).
  4. Alberto Abadie & Guido W. Imbens, 2008. "On the Failure of the Bootstrap for Matching Estimators," Econometrica, Econometric Society, vol. 76(6), pages 1537-1557, November.
  5. Bhattacharya, Debopam & Dupas, Pascaline, 2012. "Inferring welfare maximizing treatment assignment under budget constraints," Journal of Econometrics, Elsevier, vol. 167(1), pages 168-196.
  6. Pierre Cahuc & Bruno Crépon & Julien Guitard & Marc Gurgand, 2008. "Policy Evaluation in Equilibrium The Case of Job Searcg Counseling in France," Working Papers 2008-13, Centre de Recherche en Economie et Statistique.
  7. Edward Miguel & Michael Kremer, 2004. "Worms: Identifying Impacts on Education and Health in the Presence of Treatment Externalities," Econometrica, Econometric Society, vol. 72(1), pages 159-217, 01.
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