Understanding Instrumental Variables in Models with Essential Heterogeneity

Heckman, James J.; Vytlacil, Edward; Urzúa, Sergio

doi:10.3386/w12574

Cited by 230 publications

(324 citation statements)

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“…Although the purpose of this study was to estimate the e¤ect of aggregated public health care expenditure, i.e. to estimate the average e¤ect, such heterogeneity might cause a problem when estimating the e¤ect with IV methods (Heckman et al, 2006). Here, the problem would arise if the marginal expenditure identi…ed by the instrumental variables were non-representative in terms of their e¤ect on absence.…”

Section: About Herementioning

confidence: 99%

The effect of health care expenditure on sickness absence

Granlund

2010

Eur J Health Econ

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Increased health care expenditure could be used to improve quality of care or reduce waiting time and could therefore be expected to a¤ect health and sickness absence of a population. Still, based on data from a panel of the Swedish municipalities, public health care expenditure was found to have no or a negligible e¤ect on absence due to sickness or disability. The same result was obtained when separate estimates were done for men and women and for absence due to sickness and disability.

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Section: About Herementioning

confidence: 99%

The effect of health care expenditure on sickness absence

Granlund

2010

Eur J Health Econ

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“…The concept of MTE was first introduced by Bjorklund and Moffitt (1987). Carneiro et al (2001), Heckman et al (2006), and Heckman and Vytlacil (2007) develop the theoretical framework of MTE estimation for the returns to schooling; derive the identification of the average treatment effect (ATE), treatment on the treated (TT), and treatment on the untreated (TUT); and also provide the empirical applications of these methods for U.S. data. Heckman and Li (2003) and Wang et al (2007) apply these methods to the estimation of the returns to education in China.…”

Section: Heterogeneous Returns To Higher Educationmentioning

confidence: 99%

“…In the literature, such a model is referred to as "random coefficient" or "heterogeneous treatment effect" models (Heckman et al (2006)). There are two potential wage outcomes (for workers with and without higher education):…”

Section: Returns To Education: Model With Essential Heterogeneitymentioning

confidence: 99%

“…Second, the paper uses the recently developed non-parametric model with essential heterogeneity to identify marginal returns to education -the heterogeneous returns that vary with the level of unobserved individual characteristics. This estimation is based on the research of Carneiro et al (2001), Heckman et al (2006), and Heckman and Vytlacil (2007), who develop the theoretical and empirical framework for the marginal treatment effects (MTE) estimations. The main advantage of using this model is that both the heterogeneity of the returns to education and the selection of individuals based on these heterogeneous returns can be accounted for.…”

Section: Introductionmentioning

confidence: 99%

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Expansion of higher education, employment and wages: Evidence from the Russian Transition

Kyui

2016

Labour Economics

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. iii Terms of use: Documents in AbstractThis paper analyzes the effects of an educational system expansion on labour market outcomes, drawing upon a 15-year natural experiment in the Russian Federation. Regional increases in student intake capacities in Russian universities, a result of educational reforms, provide a plausibly exogenous variation in access to higher education. Additionally, the gradual nature of this expansion allows for estimation of heterogeneous returns to education for individuals who successfully took advantage of increasing educational opportunities. Using simultaneous equations models and a nonparametric model with essential heterogeneity, the paper identifies strong positive returns to education in terms of employment and wages. Marginal returns to higher education are estimated to decline for lower levels of individual unobserved characteristics that positively influence higher education attainment. Finally, the returns to higher education are found to decrease for those who, as a result of the reforms, increasingly pursued higher education.

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“…Borrowing the notation of Heckman, Urzua, and Vytlacil (2006) and Zhou and Xie (2016a), we propose a simple model for parental divorce that incorporates unobserved response heterogeneity. We define the effect of parental divorce on children's outcomes to be a function of both and , called the marginal treatment effect (MTE) 9 :…”

Section: Modeling Heterogeneous Effects Of Parental Divorce By Observmentioning

confidence: 99%

Unequal Families, Unequal Effects: How Parental Divorce Differentially Impacts Children's Educational Attainment

Brand¹,

Moore²,

Song³

et al. 2017

Preprint

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A substantial literature suggests that family disruption leads to lower educational attainment among children. We focus on how the effects of parental divorce on children's education differ across families with varying likelihoods of disruption. Using U.S. panel data, with careful attention to the assumptions and methods needed to estimate total and mediating causal effects, we find a significant effect of parental divorce on educational attainment among children whose parents were unlikely to divorce, for whom divorce was thus a relative shock. We find no effect among children whose parents were likely to divorce and for whom divorce was one of many disadvantages, and thus less economically and socially disruptive. We also find that the observed effect of divorce on children's education is strongly mediated by post-divorce family income. Children's psychosocial skills also explain a portion of the effect among children with a low propensity for parental divorce, while cognitive skills play no role in explaining the negative association between divorce and children's education. Our results suggest that family disruption does not uniformly disrupt children's attainment. UNEQUAL FAMILIES, UNEQUAL EFFECTS:HOW PARENTAL DIVORCE DIFFERENTIALLY IMPACTS CHILDREN'S EDUCATIONAL ATTAINMENT Family disruption has long been implicated as a critical event impacting the lives of children.Parental divorce negatively affects a variety of children's outcomes, including psychological wellbeing and academic achievement (see McLanahan, Tach, and Schneider [2013] for a review).Highly-cited research has shown that divorce is negative for children's educational attainment Prior research has also largely overlooked how the predisposition to experience parental divorce may condition the mechanisms by which parental divorce impacts children's education.We assess the degree to which decreased educational attainment among children in response to parental divorce is mediated by three factors: post-divorce family instability, family economic resources, and children's skills. Our study is thus motivated by two central aims. First, we assess how the effects of parental divorce vary across families with varying likelihoods, or propensities, of disruption. We hypothesize that family "disruption" is not uniformly disruptive. For some, such events require no more than a modicum of social-psychological and behavioral response. For others, such events are 3 unexpected shocks and necessitate considerable adjustment. The degree of disruption varies by the likelihood and corresponding expectation that such events will occur. Through examining heterogeneity in the effects of divorce by the observed likelihood that children experience a parental divorce, we shed new light on subpopulations for whom the causal effects of divorce may be considerable, modest, or even absent. Second, once we establish how total effects vary across families, we assess several key mediating effects, or mechanisms through which parental divorce affects children's educatio...

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Understanding Instrumental Variables in Models with Essential Heterogeneity

Abstract: provided helpful comments on various drafts. Supplementary material for this paper is available at the website http;//jenni.uchicago.edu/underiv. The views expressed herein are those of the author(s) and do not necessarily reflect the views of the National Bureau of Economic Research.

Cited by 230 publications

References 32 publications

The effect of health care expenditure on sickness absence

The effect of health care expenditure on sickness absence

Expansion of higher education, employment and wages: Evidence from the Russian Transition

Unequal Families, Unequal Effects: How Parental Divorce Differentially Impacts Children's Educational Attainment

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