Assessing the Monotonicity Assumption in IV and fuzzy RD designs

Mario Fiorini and Katrien Stevens

No 2014-13, Working Papers from University of Sydney, School of Economics

Abstract: Whenever treatment e_ects are heterogeneous and there is sorting into treatment based on the gain, monotonicity is a condition that both Instrumental Variable and fuzzy Regression Discontinuity designs have to satisfy for their estimate to be interpretable as a LATE. However, applied economic work rarely discusses this important assumption. This is in stark contrast to the lengthy discussions dedicated to the other IV and fuzzy RD conditions. We show that monotonicity can and should be investigated using a mix of economic insights, data patterns and formal tests. This is just an extra step to validate the results. We provide examples in a variety of settings as a guide to practice.

Keywords: essential heterogeneity; monotonicity assumption; LATE; instrumental variable; regression discontinuity (search for similar items in EconPapers)
Date: 2014-10
New Economics Papers: this item is included in nep-ecm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

Downloads: (external link)
http://econ-wpseries.com/2014/201413.pdf
Our link check indicates that this URL is bad, the error code is: 500 Can't connect to econ-wpseries.com:80 (No such host is known. )

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:syd:wpaper:2014-13

Access Statistics for this paper

More papers in Working Papers from University of Sydney, School of Economics Contact information at EDIRC.
Bibliographic data for series maintained by Vanessa Holcombe ().