TY  - JOUR
AU  - Heckman,James J.
AU  - Vytlacil,Edward J.
TI  - Local Instrumental Variables
JF  - National Bureau of Economic Research Technical Working Paper Series
VL  - No. 252
PY  - 2000
Y2  - April 2000
UR  - http://www.nber.org/papers/t0252
L1  - http://www.nber.org/papers/t0252.pdf
N1  - Author contact info:
James J. Heckman
Department of Economics
The University of Chicago
1126 E. 59th Street
Chicago, IL 60637
Tel: 773/702-0634
Fax: 773/702-8490
E-Mail: jjh@uchicago.edu
AB  - This paper unites the treatment effect literature and the latent variable literature.  The economic questions answered by the commonly used treatment effect parameters are considered. We demonstrate how the marginal treatment effect parameter can be used in a latent variable framework to generate the average treatment effect, the effect of treatment on the treated and the local average treatment effect, thereby establishing a new relationship among these parameters.  The method of local instrumental variables directly estimates the marginal treatment effect parameters, and thus can be used to estimate all of the conventional treatment effect parameters  when the index condition holds and the parameters are identified.  When they are not, the method of local instrumental variables can be used to produce bounds on the parameters with the width of the bounds depending on the width of the support for the index generating the choice of the observed potential outcome.
ER  -