Testing Local Average Treatment Effect Assumptions

Ismael Mourifié () and Yuanyuan Wan

Working Papers from University of Toronto, Department of Economics

Abstract: In this paper, we discuss the key conditions for the identification and estimation of the local average treatment effect (LATE, Imbens and Angrist, 1994): the valid instrument assumption (LI) and the monotonicity assumption (LM). We show that the joint assumptions of LI and LM have a testable implication that can be summarized by a sign restriction defined by a set of intersection bounds. We propose an easy-to-implement testing procedure that can be analyzed in the framework of Chernozhukov, Lee, and Rosen (2013) and implemented using the Stata package of Chernozhukov, Kim, Lee, and Rosen (2013). We apply the proposed tests to the "draft eligibility" instrument in Angrist (1991), the "college proximity" instrument in Card (1993) and the "same sex" instrument in Angrist and Evans (1998).

Keywords: LATE; Instrumental Variables; hypothesis testing; intersection bounds; conditionally more compliers (search for similar items in EconPapers)
JEL-codes: C12 C15 C21 (search for similar items in EconPapers)
Pages: Unknown pages
Date: 2014-07-07
New Economics Papers: this item is included in nep-ecm
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Citations: View citations in EconPapers (3)

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