Treatment Effects for Discrete Outcomes when Responses to Treatment Vary Among Observationally Identical Persons: An Application to Norwegian ...

Arild Aakvik, James J. Heckman, Edward J. Vytlacil

NBER Technical Working Paper No. 262
Issued in September 2000
NBER Program(s):   TWP

This paper formulates an econometric framework for studying the impact of interventions on discrete outcomes when responses to treatment vary among observationally identical persons. Using a latent variable model that can be linked to well-posed economic models, we show how to define and interpret the average treatment effects, the average effect of treatment on the treated, the marginal treatment effect and the distribution of treatment effects for discrete outcomes. To estimate these parameters and the distribution of treatment effects, we formulate and estimate a discrete choice model with unobservables generated by a factor structure model. We apply our methods to evaluate the effect of Norwegian Vocational Rehabilitation training programs on employment outcomes for women. We find that applicants to these programs who participate in active training have a 4.6% higher employment rate than nonparticipants. When we control for the observable characteristics of applicants, we find that the average treatment effects falls to 4.1%. When we control for the unobservables characteristics of applicants, the average treatment effect falls to -1.4% and effect of treatment on the treated is -11%. We also find evidence of substantial heterogeneity in response to training.

download in pdf format
   (561 K)

email paper

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/t0262

Published: Aakvik, Arild, James J. Heckman and Edward J. Vytlacil. "Estimating Treatment Effects For Discrete Outcomes When Responses To Treatment Vary: An Application To Norwegian Vocational Rehabilitation Programs," Journal of Econometrics, 2005, v125(1-2,Mar-Apr), 15-51.

Users who downloaded this paper also downloaded* these:
Eissa and Hoynes Behavioral Responses to Taxes: Lessons from the EITC and Labor Supply
Carneiro, Hansen, and Heckman w9546 Estimating Distributions of Treatment Effects with an Application to the Returns to Schooling and Measurement of the Effects of Uncertainty on College
Heckman, Tobias, and Vytlacil w7950 Simple Estimators for Treatment Parameters in a Latent Variable Framework with an Application to Estimating the Returns to Schooling
Heckman, Stixrud, and Urzúa w12006 The Effects of Cognitive and Noncognitive Abilities on Labor Market Outcomes and Social Behavior
Gordon and Slemrod w6576 Are "Real" Responses to Taxes Simply Income Shifting Between Corporate and Personal Tax Bases?
NBER Videos

National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email:

Contact Us