Can Variation in Subgroups' Average Treatment Effects Explain Treatment Effect Heterogeneity? Evidence from a Social Experiment
In this paper, we assess whether welfare reform affects earnings only through mean impacts that are constant within but vary across subgroups. This is important because researchers interested in treatment effect heterogeneity typically restrict their attention to estimating mean impacts that are only allowed to vary across subgroups. Using a novel approach to simulating treatment group earnings under the constant mean-impacts within subgroup model, we find that this model does a poor job of capturing the treatment effect heterogeneity for Connecticut's Jobs First welfare reform experiment using quantile treatment effects. Notably, ignoring within-group heterogeneity would lead one to miss evidence that the Jobs First experiment's effects are consistent with central predictions of basic labor supply theory.
The data used in this paper are derived from data files made available to researchers by MDRC. The authors remain solely responsible for how the data have been used or interpreted. We are very grateful to MDRC for providing the public access to the experimental data used here. We would also like to thank Alberto Abadie, Michael Anderson, Joe Altonji, Richard Blundell, Mike Boozer, David Brownstone, Moshe Buchinsky, Raj Chetty, Julie Cullen, Joe Cummins, Peng Ding, Avi Feller, David Green, Jeff Grogger, Jon Guryan, John Ham, Pat Kline, Thomas Lemieux, Bruce Meyer, Luke Miratrix, Robert Moffitt, Enrico Moretti, Giuseppe Ragusa, Shu Shen, Jeff Smith, Melissa Tartari, and Rob Valetta for helpful conversations, as well as seminar participants at the IRP Summer Research Workshop, the SOLE meetings, the IZA-SPEAC conference, the Harris School, UBC, UC Davis, UC Irvine, UCL, UCLA, UCSD, UCSC, UCSB, the San Francisco Federal Reserve Bank, Tinbergen Institute, Toronto, and Yale University. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.
Marianne P. Bitler & Jonah B. Gelbach & Hilary W. Hoynes, 2017. "Can Variation in Subgroups' Average Treatment Effects Explain Treatment Effect Heterogeneity? Evidence from a Social Experiment," The Review of Economics and Statistics, vol 99(4), pages 683-697. citation courtesy of