Simple Tests for Selection Bias: Learning More from Instrumental Variables

35 Pages Posted: 22 Sep 2015

See all articles by Dan Black

Dan Black

University of Chicago - Harris School of Public Policy

Joonhwi Joo

University of Texas at Dallas - Naveen Jindal School of Management

Robert LaLonde

University of Chicago - Harris School of Public Policy; National Bureau of Economic Research (NBER); IZA Institute of Labor Economics

Jeffrey A. Smith

University of Wisconsin - Madison; National Bureau of Economic Research (NBER); Institute for the Study of Labor (IZA)

Evan Taylor

University of Michigan at Ann Arbor

Abstract

We provide simple tests for selection on unobserved variables in the Vytlacil-Imbens-Angrist framework for Local Average Treatment Effects. The tests allow researchers not only to test for selection on either or both of the treated and untreated outcomes, but also to assess the magnitude of the selection effect. The tests are quite simple; undergraduates after an introductory econometrics class should be able to implement these tests. We illustrate our tests with two empirical applications: the impact of children on female labor supply from Angrist and Evans (1998) and the training of adult women from the Job Training Partnership Act (JTPA) experiment.

Keywords: local average treatment effects, selection, instrumental variables

JEL Classification: C10, C18, J01, J08

Suggested Citation

Black, Dan and Joo, Joonhwi and LaLonde, Robert J. and Smith, Jeffrey Andrew and Taylor, Evan, Simple Tests for Selection Bias: Learning More from Instrumental Variables. IZA Discussion Paper No. 9346. Available at SSRN: https://ssrn.com/abstract=2663776

Dan Black (Contact Author)

University of Chicago - Harris School of Public Policy ( email )

1155 East 60th Street
Chicago, IL 60637
United States

Joonhwi Joo

University of Texas at Dallas - Naveen Jindal School of Management ( email )

P.O. Box 830688
Richardson, TX TX 75083-0688
United States
75080 (Fax)

Robert J. LaLonde

University of Chicago - Harris School of Public Policy ( email )

1155 East 60th Street
Chicago, IL 60637
United States

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

Jeffrey Andrew Smith

University of Wisconsin - Madison

716 Langdon Street
Madison, WI 53706-1481
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Institute for the Study of Labor (IZA)

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

Evan Taylor

University of Michigan at Ann Arbor ( email )

110 Tappan Hall
855 S. University Ave
Ann Arbor, MI 48109
United States

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