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Exogenous Treatment and Endogenous Factors: Vanishing of Omitted Variable Bias on the Interaction Term

Olena Nizalova () and Irina Murtazashvili

No 6282, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: Whether interested in the differential impact of a particular factor in various institutional settings or in the heterogeneous effect of policy or random experiment, the empirical researcher confronts a problem if the factor of interest is correlated with an omitted variable. This paper considers circumstances under which the estimate of the mentioned effect is consistent. We find that if the source of heterogeneity and omitted variable are jointly independent of policy or treatment, then the OLS estimate on the interaction term between the treatment and endogenous factor turns out to be consistent.

Keywords: treatment effect; heterogeneity; policy evaluation; random experiments; omitted variable bias (search for similar items in EconPapers)
JEL-codes: C21 C93 (search for similar items in EconPapers)
Date: 2012-01
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Published in Journal of Econometric Methods, 2016, 5(1), 71-78

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Related works:
Journal Article: Exogenous Treatment and Endogenous Factors: Vanishing of Omitted Variable Bias on the Interaction Term (2016) Downloads
Working Paper: Exogenous Treatment and Endogenous Factors: Vanishing of Omitted Variable Bias on the Interaction Term (2011) Downloads
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