Robustness of the Encouragement Design in a Two-Treatment Randomized Control Trial

13 Pages Posted: 22 Jun 2013

See all articles by Luc Behaghel

Luc Behaghel

Paris School of Economics; National Institute of Statistics and Economic Studies (INSEE) - Center for Research in Economics and Statistics (CREST)

Bruno Crepon

National Institute of Statistics and Economic Studies (INSEE) - National School for Statistical and Economic Administration (ENSAE); IZA Institute of Labor Economics

Marc Gurgand

National Center for Scientific Research (CNRS); National Institute of Statistics and Economic Studies (INSEE) - Center for Research in Economics and Statistics (CREST)

Abstract

In this paper we discuss how the "encouragement design" used in randomized controlled trials can be extended to a setting with two treatments and one control group. Conditions to interpret the Two-Stage Least Squares (TSLS) estimates causally are stronger than in the case with only one treatment and one control group.A first case where a causal interpretation holds is when only those assigned to one of the two treatments can effectively enter the corresponding program. A second case is when there are always takers. In that second case, entry rates into a given program should be the same among those assigned to the control group and those assigned to the other program; this restriction can be tested from the data. In cases where the restriction is rejected, we derive bounds to the Local Average Treatment Effect (LATE) based on weaker monotonicity conditions. We illustrate the results using data from a large randomized experiment where job seekers at risk of long term unemployment can receive a reinforced counseling scheme offered either by the public or the private sector, or remain on a standard track.

Keywords: randomized evaluation, local average treatment effect, bounds

JEL Classification: J64, J68, H44

Suggested Citation

Behaghel, Luc and Crepon, Bruno and Gurgand, Marc, Robustness of the Encouragement Design in a Two-Treatment Randomized Control Trial. IZA Discussion Paper No. 7447. Available at SSRN: https://ssrn.com/abstract=2283562

Luc Behaghel (Contact Author)

Paris School of Economics ( email )

48 Boulevard Jourdan
Paris, 75014 75014
France

National Institute of Statistics and Economic Studies (INSEE) - Center for Research in Economics and Statistics (CREST) ( email )

15 Boulevard Gabriel Peri
Malakoff Cedex, 1 92245
France

Bruno Crepon

National Institute of Statistics and Economic Studies (INSEE) - National School for Statistical and Economic Administration (ENSAE) ( email )

92245 Malakoff Cedex
France

IZA Institute of Labor Economics

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

Marc Gurgand

National Center for Scientific Research (CNRS) ( email )

3, rue Michel-Ange
Paris cedex 16, 75794
France

National Institute of Statistics and Economic Studies (INSEE) - Center for Research in Economics and Statistics (CREST)

15 Boulevard Gabriel Peri
Malakoff Cedex, 1 92245
France

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