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A generalization of the balancing property of the propensity score

Author

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  • Markus Froelich

Abstract

Propensity score matching is a nonparametric technique frequently used for estimating average treatment effects. Yet its applicability is not confined to treatment evaluation. In this paper the propensity score property is generalized to the setting of selection on unobservables. It is shown that propensity score matching can be used to decompose effects due to observables and due to unobservables; which can be used, for example, to analyze racial or sexual discrimination. Furthermore, the generalized propensity score property justifies the use of propensity score matching in difference-in-difference treatment evaluation.

Suggested Citation

  • Markus Froelich, 2002. "A generalization of the balancing property of the propensity score," University of St. Gallen Department of Economics working paper series 2002 2002-08, Department of Economics, University of St. Gallen.
    • Handle: RePEc:usg:dp2002:2002-08
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    More about this item

    Keywords

    Evaluation; matching; treatment effect; unobservables; covariate-adjustment; difference-in-difference; discrimination;
    All these keywords.

    JEL classification:

    • C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General
    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • J71 - Labor and Demographic Economics - - Labor Discrimination - - - Hiring and Firing

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