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Instrumental variables, selection models, and tight bounds on the average treatment effect

  • Conference paper
Econometric Evaluation of Labour Market Policies

Part of the book series: ZEW Economic Studies ((ZEW,volume 13))

Abstract

This paper exposits and relates two distinct approaches to bounding the average treatment effect. One approach, based on instrumental variables, is due to (Manski 1990, 1994), who derives sharp bounds on the average treatment effect under a mean independence form of the instrumental variables (IV) condition. The second approach, based on latent index models, is due to (Heckman and Vytlacil 1999, 2000a), who derive bounds on the average treatment effect that exploit the assumption of a nonparametric selection model with an exclusion restriction. In this paper, we study the relationship between the two sets of bounds implied by these alternative conditions. We show that: (1) the Heckman and Vytlacil bounds are sharp given their assumption of a nonparametric selection model; (2) the Man-ski IV bounds simplify to the Heckman and Vytlacil bounds under the non-parametric selection model assumption.

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© 2001 Springer-Verlag Berlin Heidelberg

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Heckman, J.J., Vytlacil, E.J. (2001). Instrumental variables, selection models, and tight bounds on the average treatment effect. In: Lechner, M., Pfeiffer, F. (eds) Econometric Evaluation of Labour Market Policies. ZEW Economic Studies, vol 13. Physica, Heidelberg. https://doi.org/10.1007/978-3-642-57615-7_1

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  • DOI: https://doi.org/10.1007/978-3-642-57615-7_1

  • Publisher Name: Physica, Heidelberg

  • Print ISBN: 978-3-7908-1372-2

  • Online ISBN: 978-3-642-57615-7

  • eBook Packages: Springer Book Archive

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