Testing Local Average Treatment Effect Assumptions

22 Pages Posted: 27 Apr 2014 Last revised: 11 Dec 2015

See all articles by Ismael Mourifie

Ismael Mourifie

University of Toronto - Department of Economics

Yuanyuan Wan

University of Toronto - Department of Economics

Date Written: November 19, 2015

Abstract

In this paper, we discuss the key conditions for the identification and estimation of the local average treatment effect (LATE, Imbens and Angrist, 1994): the valid instrument assumption (LI) and the monotonicity assumption (LM). We show that the joint assumptions of LI and LM have a testable implication that can be summarized by a sign restriction defined by a set of intersection bounds. We propose an easy-to-implement testing procedure that can be analyzed in the framework of Chernozhukov, Lee, and Rosen (2013) and implemented using the Stata package of Chernozhukov,Kim, Lee, and Rosen (2013). We apply the proposed tests to the “draft eligibility” instrument in Angrist (1991), the “college proximity” instrument in Card (1993) and the “same sex” instrument in Angrist and Evans (1998).

Keywords: LATE, hypothesis testing, intersection bounds, conditionally more compliers

JEL Classification: C12, C15, C21

Suggested Citation

Mourifie, Ismael and Wan, Yuanyuan, Testing Local Average Treatment Effect Assumptions (November 19, 2015). Available at SSRN: https://ssrn.com/abstract=2429664 or http://dx.doi.org/10.2139/ssrn.2429664

Ismael Mourifie (Contact Author)

University of Toronto - Department of Economics ( email )

150 St. George Street
Toronto, Ontario M5S3G7
Canada

Yuanyuan Wan

University of Toronto - Department of Economics ( email )

150 St. George Street
Toronto, Ontario M5S3G7
Canada

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
348
Abstract Views
1,551
rank
106,514
PlumX Metrics