Relaxing monotonicity in the identification of local average treatment effects
Type
working paper
Date Issued
2011
Author(s)
Abstract
In heterogeneous treatment effect models with endogeneity, the identification of the local average treatment effect (LATE) typically relies on an instrument that satisfies two conditions: (i) joint independence of the potential post-instrument variables and the instrument and (ii) monotonicity of the treatment in the instrument. We show that identification is still feasible when replacing monotonicity by a strictly weaker local monotonicity condition (given marginal potential outcomes). We demonstrate that the latter allows identifying the LATEs on the (i) compliers (whose treatment reacts to the instrument in the intended way), (ii) defiers (who react counter-intuitively), and (iii) both populations jointly. Furthermore, (i) and (iii) coincides with standard LATE if monotonicity holds. We also present an application to the quarter of birth instrument.
Language
English
Keywords
instrumental variable
treatment effects
LATE
local monotonicity
HSG Classification
contribution to scientific community
Refereed
No
Publisher
VWA, Universität St. Gallen
Subject(s)
Division(s)
Eprints ID
206868
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Name
LATE without monotonicity.pdf
Size
636.4 KB
Format
Adobe PDF
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