Tight Bounds on Distributional Treatment Effect Parameters using Panel Data with an Application on Job Displacement

56 Pages Posted: 30 Aug 2017 Last revised: 18 Apr 2018

Date Written: April 5, 2018

Abstract

This paper develops new techniques to bound distributional treatment effect parameters that depend on the joint distribution of potential outcomes -- an object not identified by standard identifying assumptions such as selection on observables or even when treatment is randomly assigned. I show that panel data and an additional assumption on the dependence between untreated potential outcomes for the treated group over time (i) provide more identifying power for distributional treatment effect parameters than existing bounds and (ii) provide a more plausible set of conditions than existing methods that obtain point identification. I apply these bounds to study heterogeneity in the effect of job displacement during the Great Recession. Using standard techniques, I find that workers who were displaced during the Great Recession lost on average 39% of their earnings relative to their counterfactual earnings had they not been displaced. Using the methods developed in the current paper, I also show that the average effect masks substantial heterogeneity across workers.

Keywords: Joint Distribution of Potential Outcomes, Distribution of the Treatment Effect, Quantile of the Treatment Effect, Copula Stability Assumption, Panel Data, Job Displacement

JEL Classification: C14, C31, C33, J63

Suggested Citation

Callaway, Brantly, Tight Bounds on Distributional Treatment Effect Parameters using Panel Data with an Application on Job Displacement (April 5, 2018). Available at SSRN: https://ssrn.com/abstract=3028251 or http://dx.doi.org/10.2139/ssrn.3028251

Brantly Callaway (Contact Author)

Temple University ( email )

Philadelphia, PA 19122
United States

HOME PAGE: http://brantlycallaway.com

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