TY  - JOUR
AU  - Heckman,James J.
AU  - Lochner,Lance
AU  - Taber,Christopher
TI  - General Equilibrium Treatment Effects: A Study of Tuition Policy
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 6426
PY  - 1998
Y2  - February 1998
UR  - http://www.nber.org/papers/w6426
L1  - http://www.nber.org/papers/w6426.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

Lance Lochner
Department of Economics, Faculty of Social Science
University of Western Ontario
1151 Richmond Street, North
London, ON  N6A 5C2
CANADA
Tel: 519/661-2111 ext. 85281
Fax: 519/661-3666
E-Mail: llochner@uwo.ca

Christopher R. Taber
Department of Economics
University of Wisconsin -Madison
1180 Observatory Dr
Social Sciences Building #6448
Madison, WI 53706-1320
Tel: (608) 263-7791
Fax: (608) 262-2033
E-Mail: ctaber@ssc.wisc.edu
AB  - This paper defines and estimates general equilibrium treatment effects.  The conventional approach in the literature on treatment effects ignores interactions among individuals induced by the policy interventions being studied.  Focusing on the impact of tuition policy, and using estimates from our dynamic overlapping generations general equilibrium model of capital and human capital formation, we find that general equilibrium impacts of tuition on college enrollment are an order of magnitude smaller than those reported in the literature on microeconomic treatment effects.  The assumptions used to justify the LATE parameter in a partial equilibrium setting do not hold in a general equilibrium setting.  Policy changes induce two way flows.  We extend the LATE concept to a general equilibrium setting.  We present a more comprehensive evaluation to program evaluation by considering both the tax and benefit consequences of the program being evaluated and placing the analysis in a market setting.
ER  -