Treatment Evaluation in the Case of Interactions within Markets

42 Pages Posted: 1 Feb 2010

See all articles by Marc Ferracci

Marc Ferracci

Université Paris-Est Marne la Vallée (UPEMLV); CREST-INSEE

Grégory Jolivet

University of Bristol

Gerard J. van den Berg

VU University Amsterdam - Department of Economics; Centre for Economic Policy Research (CEPR); IZA Institute of Labor Economics; Tinbergen Institute

Abstract

We extend the standard evaluation framework to allow for interactions between individuals within segmented markets. An individual's outcome depends not only on the assigned treatment status but also on (features of) the distribution of the assigned treatments in his market. To evaluate how the distribution of treatments within a market causally affects the average effect within the market, averaged over the full population, we develop an identification and estimation method in two steps. The first one focuses on the distribution of the treatment within markets and between individuals and the second step addresses the distribution of the treatment between markets. We apply our method to data on training programs for unemployed workers in France. We use a rich administrative register of unemployment and training spells as well as the information on local labor demand that is used by unemployment agencies to allocate training programs. The results show that the average treatment effect on the employment rate causally decreases with respect to the proportion treated in the market. Our analysis accounts for unobserved heterogeneity between markets (using the longitudinal dimension of the data) and, in a robustness check, between individuals.

Keywords: treatment evaluation, equilibrium effects, matching estimators

JEL Classification: C13, C14, C21, C31, J64

Suggested Citation

Ferracci, Marc and Jolivet, Grégory and van den Berg, Gerard J., Treatment Evaluation in the Case of Interactions within Markets. IZA Discussion Paper No. 4700. Available at SSRN: https://ssrn.com/abstract=1545127

Marc Ferracci (Contact Author)

Université Paris-Est Marne la Vallée (UPEMLV) ( email )

France

CREST-INSEE

18, Boulevard Adolphe-Pinard
92244 Malakoff Cedex
France

Grégory Jolivet

University of Bristol ( email )

University of Bristol,
Senate House, Tyndall Avenue
Bristol, BS8 ITH
United Kingdom

Gerard J. Van den Berg

VU University Amsterdam - Department of Economics ( email )

De Boelelaan 1105
1081 HV Amsterdam
Netherlands
+31 20 444 6132 (Phone)
+32 20 444 6020 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Tinbergen Institute

Burg. Oudlaan 50
Rotterdam, 3062 PA
Netherlands

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