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Treatment Effect Heterogeneity in Theory and Practice

  • Angrist, Joshua

    ()

    (MIT)

Instrumental Variables (IV) methods identify internally valid causal effects for individuals whose treatment status is manipulable by the instrument at hand. Inference for other populations requires homogeneity assumptions. This paper outlines a theoretical framework that nests causal homogeneity assumptions. These ideas are illustrated using sibling-sex composition to estimate the effect of child-bearing on economic and marital outcomes. The application is motivated by American welfare reform. The empirical results generally support the notion of reduced labor supply and increased poverty as a consequence of childbearing, but evidence on the impact of childbearing on marital stability and welfare use is more tenuous.

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File URL: http://ftp.iza.org/dp851.pdf
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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 851.

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Length: 47 pages
Date of creation: Aug 2003
Date of revision:
Publication status: published in: Economic Journal, 2004, 114 (494), C52-C83
Handle: RePEc:iza:izadps:dp851
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  1. Joshua D. Angrist & William N. Evans, 1996. "Children and Their Parents' Labor Supply: Evidence from Exogenous Variation in Family Size," NBER Working Papers 5778, National Bureau of Economic Research, Inc.
  2. Joshua D. Angrist, 1991. "Instrumental Variables Estimation of Average Treatment Effects in Econometrics and Epidemiology," NBER Technical Working Papers 0115, National Bureau of Economic Research, Inc.
  3. Jeff Grogger & Stephen G. Bronars, 2001. "The Effect of Welfare Payments on the Marriage and Fertility Behavior of Unwed Mothers: Results from a Twins Experiment," Journal of Political Economy, University of Chicago Press, vol. 109(3), pages 529-545, June.
  4. Joshua D. Angrist & Guido W. Imbens, 1991. "Sources of Identifying Information in Evaluation Models," NBER Technical Working Papers 0117, National Bureau of Economic Research, Inc.
  5. Abadie A., 2002. "Bootstrap Tests for Distributional Treatment Effects in Instrumental Variable Models," Journal of the American Statistical Association, American Statistical Association, vol. 97, pages 284-292, March.
  6. J.D. Angrist & Guido W. Imbens & D.B. Rubin, 1993. "Identification of Causal Effects Using Instrumental Variables," NBER Technical Working Papers 0136, National Bureau of Economic Research, Inc.
  7. Wooldridge, Jeffrey M., 2003. "Further results on instrumental variables estimation of average treatment effects in the correlated random coefficient model," Economics Letters, Elsevier, vol. 79(2), pages 185-191, May.
  8. Joshua D. Angrist & Guido W. Imbens, 1995. "Identification and Estimation of Local Average Treatment Effects," NBER Technical Working Papers 0118, National Bureau of Economic Research, Inc.
  9. Becker, Gary S & Landes, Elisabeth M & Michael, Robert T, 1977. "An Economic Analysis of Marital Instability," Journal of Political Economy, University of Chicago Press, vol. 85(6), pages 1141-87, December.
  10. Heckman, J J & Tobias, Justin & Vytlacil, Ed, 2001. "Four Parameters of Interest in the Evaluation of Social Programs," Staff General Research Papers 12022, Iowa State University, Department of Economics.
  11. Rebecca M. Blank, 2002. "Evaluating Welfare Reform in the United States," NBER Working Papers 8983, National Bureau of Economic Research, Inc.
  12. Angrist, Joshua D, 2001. "Estimations of Limited Dependent Variable Models with Dummy Endogenous Regressors: Simple Strategies for Empirical Practice," Journal of Business & Economic Statistics, American Statistical Association, vol. 19(1), pages 2-16, January.
  13. Abadie, Alberto, 2003. "Semiparametric instrumental variable estimation of treatment response models," Journal of Econometrics, Elsevier, vol. 113(2), pages 231-263, April.
  14. Peter C.B. Phillips, 2003. "Vision and Influence in Econometrics: John Denis Sargan," Cowles Foundation Discussion Papers 1393, Cowles Foundation for Research in Economics, Yale University.
  15. V. Joseph Hotz & Guido W. Imbens & Jacob A. Klerman, 2000. "The Long-Term Gains from GAIN: A Re-Analysis of the Impacts of the California GAIN Program," NBER Working Papers 8007, National Bureau of Economic Research, Inc.
  16. Chamberlain, Gary, 1986. "Asymptotic efficiency in semi-parametric models with censoring," Journal of Econometrics, Elsevier, vol. 32(2), pages 189-218, July.
  17. Moffitt, Robert A., 1999. "New developments in econometric methods for labor market analysis," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 24, pages 1367-1397 Elsevier.
  18. Melissa Schettini Kearney, 2002. "Is There an Effect of Incremental Welfare Benefits on Fertility Behavior? A Look at the Family Cap," NBER Working Papers 9093, National Bureau of Economic Research, Inc.
  19. Frölich, Markus, 2002. "Nonparametric IV Estimation of Local Average Treatment Effects with Covariates," IZA Discussion Papers 588, Institute for the Study of Labor (IZA).
  20. Manski, Charles F, 1990. "Nonparametric Bounds on Treatment Effects," American Economic Review, American Economic Association, vol. 80(2), pages 319-23, May.
  21. Alberto Abadie & Joshua Angrist & Guido Imbens, 1999. "Instrumental Variables Estimates of the Effect of Subsidized Training on the Quantiles of Trainee Earnings," Working papers 99-16, Massachusetts Institute of Technology (MIT), Department of Economics.
  22. J. A. Hausman, 1976. "Specification Tests in Econometrics," Working papers 185, Massachusetts Institute of Technology (MIT), Department of Economics.
  23. Chamberlain, Gary, 1987. "Asymptotic efficiency in estimation with conditional moment restrictions," Journal of Econometrics, Elsevier, vol. 34(3), pages 305-334, March.
  24. Wooldridge, Jeffrey M., 1997. "On two stage least squares estimation of the average treatment effect in a random coefficient model," Economics Letters, Elsevier, vol. 56(2), pages 129-133, October.
  25. Tim Heaton, 1990. "Marital stability throughout the child-rearing years," Demography, Springer, vol. 27(1), pages 55-63, February.
  26. Arellano, Manuel, 2002. "Sargan's Instrumental Variables Estimation and the Generalized Method of Moments," Journal of Business & Economic Statistics, American Statistical Association, vol. 20(4), pages 450-59, October.
  27. James J. Heckman & Edward J. Vytlacil, 2000. "Local Instrumental Variables," NBER Technical Working Papers 0252, National Bureau of Economic Research, Inc.
  28. Andrew Cherlin, 1977. "The effect of children on marital dissolution," Demography, Springer, vol. 14(3), pages 265-272, August.
  29. Bronars, Stephen G & Grogger, Jeff, 1994. "The Economic Consequences of Unwed Motherhood: Using Twin Births as a Natural Experiment," American Economic Review, American Economic Association, vol. 84(5), pages 1141-56, December.
  30. Heckman, James J, 1990. "Varieties of Selection Bias," American Economic Review, American Economic Association, vol. 80(2), pages 313-18, May.
  31. A. D. Roy, 1951. "Some Thoughts On The Distribution Of Earnings," Oxford Economic Papers, Oxford University Press, vol. 3(2), pages 135-146.
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