Treatment Effect Heterogeneity in Theory and Practice
Joshua D. Angrist
Massachusetts Institute of Technology (MIT) - Department of Economics; National Bureau of Economic Research (NBER); Institute for the Study of Labor (IZA)
MIT Department of Economics Working Paper No. 03-27; IZA Discussion Paper No. 851
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.
Number of Pages in PDF File: 46
Keywords: Instrumental Variables, Marital Stability, Welfare, Causal Effects
JEL Classification: C31, J12, J13
Date posted: August 8, 2003
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