Testing Instrument Validity for LATE Identification Based on Inequality Moment Constraints

Martin Huber and Giovanni Mellace

The Review of Economics and Statistics, 2015, vol. 97, issue 2, 398-411

Abstract: We derive testable implications of instrument validity in just identified treatment effect models with endogeneity and consider several tests. The identifying assumptions of the local average treatment effect allow us to both point identify and bound the mean potential outcomes of the always takers under treatment and the never takers under nontreatment. The point-identified means must lie within their respective bounds, which provides us with four testable inequality moment constraints. Finally, we adapt our testing framework to the identification of distributional features. A brief simulation study and an application to labor market data are also provided. © 2015 The President and Fellows of Harvard College and the Massachusetts Institute of Technology

Keywords: testable implications; endogeneity; mean potential outcomes; inequality moment; distributional features; labor market data (search for similar items in EconPapers)
JEL-codes: J00 (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (69)

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Working Paper: Testing instrument validity for LATE identification based on inequality moment constraints (2011)
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