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Testing Local Average Treatment Effect Assumptions

Listed author(s):
  • Ismael Mourifie
  • Yuanyuan Wan

In this paper, we discuss the key conditions for the identification and estimation of the local average treatment effect (LATE, Imbens and Angrist, 1994): the valid instrument assumption (LI) and the monotonicity assumption (LM). We show that the joint assumptions of LI and LM have a testable implication that can be summarized by a sign restriction defined by a set of intersection bounds. We propose an easy-to-implement testing procedure that can be analyzed in the framework of Chernozhukov, Lee, and Rosen (2013) and implemented using the Stata package of Chernozhukov, Kim, Lee, and Rosen (2013). We apply the proposed tests to the "draft eligibility" instrument in Angrist (1991), the "college proximity" instrument in Card (1993) and the "same sex" instrument in Angrist and Evans (1998).

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File URL: https://www.economics.utoronto.ca/public/workingPapers/tecipa-514.pdf
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Paper provided by University of Toronto, Department of Economics in its series Working Papers with number tecipa-514.

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Length: Unknown pages
Date of creation: 07 Jul 2014
Handle: RePEc:tor:tecipa:tecipa-514
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  1. Martin Huber & Giovanni Mellace, 2015. "Testing Instrument Validity for LATE Identification Based on Inequality Moment Constraints," The Review of Economics and Statistics, MIT Press, vol. 97(2), pages 398-411, May.
  2. Kasy, Maximilian, "undated". "Instrumental variables with unrestricted heterogeneity and continuous treatment - DON'T CITE! SEE ERRATUM BELOW," Working Paper 33257, Harvard University OpenScholar.
  3. David Card, 1993. "Using Geographic Variation in College Proximity to Estimate the Return to Schooling," Working Papers 696, Princeton University, Department of Economics, Industrial Relations Section..
  4. repec:fth:prinin:317 is not listed on IDEAS
  5. David Card, 1993. "Using Geographic Variation in College Proximity to Estimate the Return to Schooling," NBER Working Papers 4483, National Bureau of Economic Research, Inc.
  6. de Chaisemartin, Clement, 2013. "Defying the LATE? Identification of local treatment effects when the instrument violates monotonicity," The Warwick Economics Research Paper Series (TWERPS) 1020, University of Warwick, Department of Economics.
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