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Identification and Estimation of Unconditional Policy Effects of an Endogenous Binary Treatment: An Unconditional MTE Approach

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  • Julian Martinez-Iriarte
  • Yixiao Sun

Abstract

This paper studies the identification and estimation of policy effects when treatment status is binary and endogenous. We introduce a new class of marginal treatment effects (MTEs) based on the influence function of the functional underlying the policy target. We show that an unconditional policy effect can be represented as a weighted average of the newly defined MTEs over the individuals who are indifferent about their treatment status. We provide conditions for point identification of the unconditional policy effects. When a quantile is the functional of interest, we introduce the UNconditional Instrumental Quantile Estimator (UNIQUE) and establish its consistency and asymptotic distribution. In the empirical application, we estimate the effect of changing college enrollment status, induced by higher tuition subsidy, on the quantiles of the wage distribution.

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  • Julian Martinez-Iriarte & Yixiao Sun, 2020. "Identification and Estimation of Unconditional Policy Effects of an Endogenous Binary Treatment: An Unconditional MTE Approach," Papers 2010.15864, arXiv.org, revised Aug 2024.
    • Handle: RePEc:arx:papers:2010.15864
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    References listed on IDEAS

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    1. Pedro Carneiro & James J. Heckman & Edward Vytlacil, 2010. "Evaluating Marginal Policy Changes and the Average Effect of Treatment for Individuals at the Margin," Econometrica, Econometric Society, vol. 78(1), pages 377-394, January.
    2. David M. Kaplan, 2019. "Interpreting Unconditional Quantile Regression with Conditional Independence," Working Papers 1912, Department of Economics, University of Missouri, revised 08 Nov 2020.
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    5. Rothe, Christoph, 2010. "Identification of unconditional partial effects in nonseparable models," Economics Letters, Elsevier, vol. 109(3), pages 171-174, December.
    6. Pagan,Adrian & Ullah,Aman, 1999. "Nonparametric Econometrics," Cambridge Books, Cambridge University Press, number 9780521355643, November.
    7. James J. Heckman & Edward Vytlacil, 2005. "Structural Equations, Treatment Effects, and Econometric Policy Evaluation," Econometrica, Econometric Society, vol. 73(3), pages 669-738, May.
    8. Maximilian Kasy, 2016. "Partial Identification, Distributional Preferences, and the Welfare Ranking of Policies," The Review of Economics and Statistics, MIT Press, vol. 98(1), pages 111-131, March.
    9. Carneiro, Pedro & Lee, Sokbae, 2009. "Estimating distributions of potential outcomes using local instrumental variables with an application to changes in college enrollment and wage inequality," Journal of Econometrics, Elsevier, vol. 149(2), pages 191-208, April.
    10. Sergio Firpo & Nicole M. Fortin & Thomas Lemieux, 2009. "Unconditional Quantile Regressions," Econometrica, Econometric Society, vol. 77(3), pages 953-973, May.
    11. James Heckman, 1997. "Instrumental Variables: A Study of Implicit Behavioral Assumptions Used in Making Program Evaluations," Journal of Human Resources, University of Wisconsin Press, vol. 32(3), pages 441-462.
    12. Vaart,A. W. van der, 2000. "Asymptotic Statistics," Cambridge Books, Cambridge University Press, number 9780521784504, November.
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    Cited by:

    1. Martínez-Iriarte, Julián & Montes-Rojas, Gabriel & Sun, Yixiao, 2024. "Unconditional effects of general policy interventions," Journal of Econometrics, Elsevier, vol. 238(2).
    2. Julian Martinez-Iriarte, 2023. "Sensitivity Analysis in Unconditional Quantile Effects," Papers 2303.14298, arXiv.org, revised Jun 2024.

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