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Global Representation of the Conditional LATE Model: A Separability Result

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  • Yu‐Chang Chen
  • Haitian Xie

Abstract

This paper studies the latent index representation of the conditional LATE model, making explicit the role of covariates in treatment selection. We find that if the directions of the monotonicity condition are the same across all values of the conditioning covariate, which is often assumed in the literature, then the treatment choice equation has to satisfy a separability condition between the instrument and the covariate. This global representation result establishes testable restrictions imposed on the way covariates enter the treatment choice equation. We later extend the representation theorem to incorporate multiple ordered levels of treatment.

Suggested Citation

  • Yu‐Chang Chen & Haitian Xie, 2022. "Global Representation of the Conditional LATE Model: A Separability Result," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 84(4), pages 789-798, August.
    • Handle: RePEc:bla:obuest:v:84:y:2022:i:4:p:789-798
    DOI: 10.1111/obes.12476
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    References listed on IDEAS

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