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What is the Value Added by using Causal Machine Learning Methods in a Welfare Experiment Evaluation?

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  • Strittmatter, Anthony

Abstract

I investigate causal machine learning (CML) methods to estimate effect heterogeneity by means of conditional average treatment effects (CATEs). In particular, I study whether the estimated effect heterogeneity can provide evidence for the theoretical labour supply predictions of Connecticut's Jobs First welfare experiment. For this application, Bitler, Gelbach, and Hoynes (2017) show that standard CATE estimators fail to provide evidence for theoretical labour supply predictions. Therefore, this is an interesting benchmark to showcase the value added by using CML methods. I report evidence that the CML estimates of CATEs provide support for the theoretical labour supply predictions. Furthermore, I document some reasons why standard CATE estimators fail to provide evidence for the theoretical predictions. However, I show the limitations of CML methods that prevent them from identifying all the effect heterogeneity of Jobs First.

Suggested Citation

  • Strittmatter, Anthony, 2019. "What is the Value Added by using Causal Machine Learning Methods in a Welfare Experiment Evaluation?," VfS Annual Conference 2019 (Leipzig): 30 Years after the Fall of the Berlin Wall - Democracy and Market Economy 203499, Verein für Socialpolitik / German Economic Association.
    • Handle: RePEc:zbw:vfsc19:203499
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    References listed on IDEAS

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    Cited by:

    1. Lechner, Michael, 2018. "Modified Causal Forests for Estimating Heterogeneous Causal Effects," IZA Discussion Papers 12040, Institute of Labor Economics (IZA).
    2. Knaus, Michael C. & Lechner, Michael & Strittmatter, Anthony, 2018. "Machine Learning Estimation of Heterogeneous Causal Effects: Empirical Monte Carlo Evidence," IZA Discussion Papers 12039, Institute of Labor Economics (IZA).

    More about this item

    Keywords

    Labour supply; individualized treatment effects; conditional average treatment effects; random forest;

    JEL classification:

    • H75 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Government: Health, Education, and Welfare
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models

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