Instrumental Variables Estimates Of The Effect Of Subsidized Training On The Quantiles Of Trainee Earnings

37 Pages Posted: 1 Dec 1999  

Alberto Abadie

Harvard University - Harvard Kennedy School (HKS); National Bureau of Economic Research (NBER)

Joshua D. Angrist

Massachusetts Institute of Technology (MIT) - Department of Economics; National Bureau of Economic Research (NBER); IZA Institute of Labor Economics

Guido W. Imbens

Stanford Graduate School of Business

Multiple version iconThere are 2 versions of this paper

Date Written: October 1999

Abstract

The effect of government programs on the distribution of participants? earnings is important for program evaluation and welfare comparisons. This paper reports estimates of the effects of JTPA training programs on the distribution of earnings. The estimation uses a new instrumental variable (IV) method that measures program impacts on the quantiles of outcome variables. This quantile treatment effects (QTE) estimator accommodates exogenous covariates and reduces to quantile regression when selection for treatment is exogenously determined. The QTE estimator can be computed as the solution to a convex linear programming problem, although this requires first-step estimation of a nuisance function. We develop distribution theory for the case where the first step is estimated nonparametrically. For women, the empirical results show that the JTPA program had the largest proportional impact at low quantiles. Perhaps surprisingly, however, JTPA training raised the quantiles of earnings for men only in the upper half of the trainee earnings distribution.

JEL Classification: C13, C14, C31, J31

Suggested Citation

Abadie, Alberto and Angrist, Joshua D. and Imbens, Guido W., Instrumental Variables Estimates Of The Effect Of Subsidized Training On The Quantiles Of Trainee Earnings (October 1999). MIT Department of Economics Working Paper No. 99-16. Available at SSRN: https://ssrn.com/abstract=195733 or http://dx.doi.org/10.2139/ssrn.195733

Alberto Abadie (Contact Author)

Harvard University - Harvard Kennedy School (HKS) ( email )

79 John F. Kennedy Street
Cambridge, MA 02138
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617-496-4547 (Phone)
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National Bureau of Economic Research (NBER)

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Joshua Angrist

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

IZA Institute of Labor Economics

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

Massachusetts Institute of Technology (MIT) - Department of Economics ( email )

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Cambridge, MA 02142
United States
617-253-8909 (Phone)
617-253-1330 (Fax)

Guido W. Imbens

Stanford Graduate School of Business ( email )

655 Knight Way
Stanford, CA 94305-5015
United States

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