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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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
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