Abstract
This chapter addresses two different but related approaches, both widely used within the literature on the econometrics of program evaluation: the Local average treatment effect (LATE) and the Regression-discontinuity-design (RDD). Considered as nearly quasi-experimental methods, these approaches have recently been the subject of a vigorous interest as tools for detecting treatment effects within special statistical settings. The first part of the chapter covers the theory behind LATE, thus illustrating how such approach can be embedded within the setting of a randomized experiment with imperfect compliance. The discussion then goes on to present the Wald estimator of LATE, and to extend LATE to the case of multiple instruments and multiple treatments. The second part of the chapter illustrates the RDD econometric theoretical background; in particular, it discusses separately sharp RDD and fuzzy RDD, and suggests a protocol for the empirical implementation of such approaches. The chapter ends with some illustrative empirical implementation of both LATE and RDD performed using Stata on both real and simulative examples.
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For kernel regressions, the optimal bandwidth in interior points is O(h 2) and is proportional to N –1/5 (Härdle and Marron 1985), so that 1/5 = 0.2 is the speed of convergence of the bias to zero; at boundaries, however, we saw that such convergence rate becomes O(h) that is proportional to (N –1/5)1/2, that is, half time the usual rate of convergence in interior points. This questions seriously the use of kernel regressions at boundaries.
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Observe that variables’ mean at which predictions are calculated using margins are in this case weighted means; for instance, for variable “agem1” this weighted mean can be got by typing: sum agem1[iweight=Ek] returning exactly 30.83818.
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Cerulli, G. (2015). Local Average Treatment Effect and Regression-Discontinuity-Design. In: Econometric Evaluation of Socio-Economic Programs. Advanced Studies in Theoretical and Applied Econometrics, vol 49. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-662-46405-2_4
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DOI: https://doi.org/10.1007/978-3-662-46405-2_4
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