From Late to MTE: Alternative Methods for the Evaluation of Policy Interventions

52 Pages Posted: 4 Aug 2016

See all articles by Thomas Cornelissen

Thomas Cornelissen

University College London

Christian Dustmann

University College London; Institute for Fiscal Studies (IFS); Centre for Economic Policy Research (CEPR)

Anna Raute

University of Mannheim

Uta Schönberg

University of Rochester; IZA Institute of Labor Economics

Multiple version iconThere are 2 versions of this paper

Date Written: July 12, 2016

Abstract

This paper provides an introduction into the estimation of Marginal Treatment Effects (MTE). Compared to the existing surveys on the subject, our paper is less technical and speaks to the applied economist with a solid basic understanding of econometric techniques who would like to use MTE estimation. Our framework of analysis is a generalized Roy model based on the potential outcomes framework, within which we define different treatment effects of interest, and review the well-known case of IV estimation with a discrete instrument resulting in a local average treatment effect (LATE). Turning to IV estimation with a continuous instrument we demonstrate that the 2SLS estimator may be viewed as a weighted average of LATEs, and discuss MTE estimation as an alternative and more informative way of exploiting a continuous instrument. We clarify the assumptions underlying the MTE framework and illustrate how the MTE estimation is implemented in practice.

Keywords: marginal treatment effects, instrumental variables, heterogeneous effects

JEL Classification: C260, I260

Suggested Citation

Cornelissen, Thomas and Dustmann, Christian and Raute, Anna and Schönberg, Uta, From Late to MTE: Alternative Methods for the Evaluation of Policy Interventions (July 12, 2016). CESifo Working Paper Series No. 5987. Available at SSRN: https://ssrn.com/abstract=2818310

Thomas Cornelissen

University College London ( email )

Gower Street
London, WC1E 6BT
United Kingdom

Christian Dustmann (Contact Author)

University College London ( email )

Gower Street
London WC1E 6BT, WC1E 6BT
United Kingdom
+44 20 7679 5832 (Phone)
+44 20 7916 2775 (Fax)

Institute for Fiscal Studies (IFS)

7 Ridgmount Street
London, WC1E 7AE
United Kingdom

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Anna Raute

University of Mannheim ( email )

Universitaetsbibliothek Mannheim
Zeitschriftenabteilung
Mannheim, 68131
Germany

Uta Schönberg

University of Rochester ( email )

Rochester, NY 14627
United States

IZA Institute of Labor Economics

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

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