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Relaxing monotonicity in the identification of local average treatment effects

abstract In heterogeneous treatment effect models with endogeneity, the identification of the local average treatment effect (LATE) typically relies on an instrument that satisfies two conditions: (i) joint independence of the potential post-instrument variables and the instrument and (ii) monotonicity of the treatment in the instrument. We show that identification is still feasible when replacing monotonicity by a strictly weaker local monotonicity condition (given marginal potential outcomes). We demonstrate that the latter allows identifying the LATEs on the (i) compliers (whose treatment reacts to the instrument in the intended way), (ii) defiers (who react counter-intuitively), and (iii) both populations jointly. Furthermore, (i) and (iii) coincides with standard LATE if monotonicity holds. We also present an application to the quarter of birth instrument.
   
type working paper (English)
   
keywords instrumental variable, treatment effects, LATE, local monotonicity
   
date of appearance 2011
publisher VWA, Universit├Ąt St. Gallen
review not reviewed
   
citation Huber, M., & Mellace, G. (2011). Relaxing monotonicity in the identification of local average treatment effects: VWA, Universit├Ąt St. Gallen.