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

Author

Listed:
  • Thomas Cornelissen
  • Christian Dustmann
  • Anna Christina Raute
  • Uta Schönberg
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.

Suggested Citation

  • Thomas Cornelissen & Christian Dustmann & Anna Christina Raute & Uta Schönberg, 2016. "From Late to MTE: Alternative Methods for the Evaluation of Policy Interventions," CESifo Working Paper Series 5987, CESifo.
    • Handle: RePEc:ces:ceswps:_5987
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    File URL: https://www.cesifo.org/DocDL/cesifo1_wp5987.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    marginal treatment effects; instrumental variables; heterogeneous effects;
    All these keywords.

    JEL classification:

    • C26 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Instrumental Variables (IV) Estimation
    • I26 - Health, Education, and Welfare - - Education - - - Returns to Education

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