Identifying the average treatment effect in ordered treatment models without unconfoundedness

Arthur Lewbel and Thomas Tao Yang

Journal of Econometrics, 2016, vol. 195, issue 1, 1-22

Abstract: We show identification of the Average Treatment Effect (ATE) when treatment is specified by ordered choice in cross section or panel models. Treatment is determined by location of a latent variable (containing a continuous instrument) relative to two or more thresholds. We place no functional form restrictions on latent errors and potential outcomes. Unconfoundedness of treatment does not hold and identification at infinity for the treated is not possible. Yet we still show nonparametric point identification and estimation of the ATE. We apply our model to reinvestigate the inverted-U relationship between competition and innovation, and find no inverted-U in US data.

Keywords: Average treatment effect; Ordered choice model; Special regressor; Semiparametric; Competition and innovation; Identification (search for similar items in EconPapers)
JEL-codes: C14 C21 C26 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:econom:v:195:y:2016:i:1:p:1-22

DOI: 10.1016/j.jeconom.2016.05.015

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