A Framework for Separating Individual Treatment Effects from Spillover, Interaction, and General Equilibrium Effects

Martin Huber and Andreas Steinmayr

No 10648, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: This paper suggests a causal framework for disentangling individual level treatment effects and interference effects, i.e., general equilibrium, spillover, or interaction effects related to treatment distribution. Thus, the framework allows for a relaxation of the Stable Unit Treatment Value Assumption (SUTVA), which assumes away any form of treatment-dependent interference between study participants. Instead, we permit interference effects within aggregate units, for example, regions or local labor markets, but need to rule out interference effects between these aggregate units. Borrowing notation from the causal mediation literature, we define a range of policy-relevant effects and formally discuss identification based on randomization, selection on observables, and difference-in-differences. We also present an application to a policy intervention extending unemployment benefit durations in selected regions of Austria that arguably affected ineligibles in treated regions through general equilibrium effects in local labor markets.

Keywords: difference-in-differences; general equilibrium effects; treatment effect; spillover effects; interaction effects; interference effects; inverse probability weighting; propensity score; mediation analysis (search for similar items in EconPapers)
JEL-codes: C21 C31 (search for similar items in EconPapers)
Pages: 42 pages
Date: 2017-03
New Economics Papers: this item is included in nep-dem, nep-net and nep-ure
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Published - pusblished in: Journal of Business and Economic Statistics, 2021, 39 (2), 422 - 436

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Related works:
Working Paper: A framework for separating individual treatment effects from spillover, interaction, and general equilibrium effects (2017)
Working Paper: A Framework for Separating Individual Treatment Effects From Spillover, Interaction, and General Equilibrium Effects (2017)
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