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Showing papers by "Institute for the Study of Labor published in 2016"


Posted ContentDOI
TL;DR: In this article, the authors provide new empirical evidence on the extent of and trends in the gender wage gap, using PSID microdata over the 1980-2010, which shows that women's work force interruptions and shorter hours remain significant in high skilled occupations, possibly due to compensating differentials.
Abstract: Using PSID microdata over the 1980-2010, we provide new empirical evidence on the extent of and trends in the gender wage gap, which declined considerably over this period. By 2010, conventional human capital variables taken together explained little of the gender wage gap, while gender differences in occupation and industry continued to be important. Moreover, the gender pay gap declined much more slowly at the top of the wage distribution that at the middle or the bottom and by 2010 was noticeably higher at the top. We then survey the literature to identify what has been learned about the explanations for the gap. We conclude that many of the traditional explanations continue to have salience. Although human capital factors are now relatively unimportant in the aggregate, women’s work force interruptions and shorter hours remain significant in high skilled occupations, possibly due to compensating differentials. Gender differences in occupations and industries, as well as differences in gender roles and the gender division of labor remain important, and research based on experimental evidence strongly suggests that discrimination cannot be discounted. Psychological attributes or noncognitive skills comprise one of the newer explanations for gender differences in outcomes. Our effort to assess the quantitative evidence on the importance of these factors suggests that they account for a small to moderate portion of the gender pay gap, considerably smaller than say occupation and industry effects, though they appear to modestly contribute to these differences.

984 citations


Journal ArticleDOI
TL;DR: This paper examined the temperature-mortality relationship over the course of the twentieth-century United States both for its own interest and to identify potentially useful adaptations for coming decades, finding that the mortality impact of days with mean temperature exceeding 80°F declined by 75 percent.
Abstract: This paper examines the temperature-mortality relationship over the course of the twentieth-century United States both for its own interest and to identify potentially useful adaptations for coming decades. There are three primary findings. First, the mortality impact of days with mean temperature exceeding 80°F declined by 75 percent. Almost the entire decline occurred after 1960. Second, the diffusion of residential air conditioning explains essentially the entire decline in hot day–related fatalities. Third, using Dubin and McFadden’s discrete-continuous model, the present value of US consumer surplus from the introduction of residential air conditioning is estimated to be $85–$185 billion (2012 dollars).

380 citations


ReportDOI
TL;DR: This paper examined the nature of the costs that firms face in adjusting labor demand in response to shocks induced by changes in output demand and prices, and empirically showed that adjustment proceeds in jumps.
Abstract: This study examines the nature of the costs that firms face in adjusting labor demand in response to shocks induced by changes in output demand and prices. Empirical work on monthly plant-level time-series data shows that adjustment proceeds in jumps. Employment is unchanged in response to small demand shocks, but moves instantaneously to a new long-run equilibrium if the shocks are large. Results in the large literature that assumes smooth adjustment are due to aggregation of this inherently nonlinear relation over subunits experiencing different shocks. The finding has implications for cyclical changes in productivity and for examining the effects of policies such as severance pay, layoff and plant-closing restrictions, and mandatory listing of job vacancies, all of which change the cost of adjusting employment.

346 citations


Journal ArticleDOI
TL;DR: This article presented an experimentally validated survey module to measure six key economic preferences -risk aversion, discounting, trust, altruism, positive and negative reciprocity - in a reliable, parsimonious and cost-effective way.
Abstract: This paper presents an experimentally validated survey module to measure six key economic preferences - risk aversion, discounting, trust, altruism, positive and negative reciprocity - in a reliable, parsimonious and cost-effective way. The survey instruments included in the module were the best predictors of preferences revealed in incentivized choice experiments. We also offer a streamlined version of the module that has been optimized and piloted for applications where time efficiency and simplicity are paramount, such as international telephone surveys.

334 citations


Posted Content
TL;DR: The authors show that people lie surprisingly little and formalize a wide range of potential explanations for the observed behavior, identify testable predictions that can distinguish between the models and conduct new experiments to do so.
Abstract: Private information is at the heart of many economic activities. For decades, economists have assumed that individuals are willing to misreport private information if this maximizes their material payoff. We combine data from 72 experimental studies in economics, psychology and sociology, and show that, in fact, people lie surprisingly little. We then formalize a wide range of potential explanations for the observed behavior, identify testable predictions that can distinguish between the models and conduct new experiments to do so. None of the most popular explanations suggested in the literature can explain the data. We show that only combining a preference for being honest with a preference for being seen as honest can organize the empirical evidence.

278 citations


Journal ArticleDOI
TL;DR: This paper explored the origins of observed differences in time preference across countries and regions and found that pre-industrial agro-climatic characteristics that were conducive to higher return to agricultural investment triggered selection, adaptation and learning processes that generated a persistent positive effect on the prevalence of long-term orientation in the contemporary era.
Abstract: This research explores the origins of observed differences in time preference across countries and regions Exploiting a natural experiment associated with the expansion of suitable crops for cultivation in the course of the Columbian Exchange, the research establishes that pre-industrial agro-climatic characteristics that were conducive to higher return to agricultural investment, triggered selection, adaptation and learning processes that generated a persistent positive effect on the prevalence of long-term orientation in the contemporary era Furthermore, the research establishes that these agro-climatic characteristics have had a culturally embodied impact on economic behavior such as technological adoption, education, saving, and smoking

252 citations


Journal ArticleDOI
TL;DR: In this paper, the authors analyzed the link between RD usually constituting the majority of firms in industrialized economies using the German KfW SME panel, and found that while firms engage in innovative activities with smaller probability, the smaller they are, for those firms that do make such investment, R&D intensity is larger the smaller firms are.
Abstract: We analyze the link between RD usually constituting the majority of firms in industrialized economies. Using the German KfW SME panel, we examine to what extent micro firms are different from other firms in terms of innovativeness. We find that while firms engage in innovative activities with smaller probability, the smaller they are, for those firms that do make such investment, R&D intensity is larger the smaller firms are. For all MSMEs, the predicted R&D intensity is positively correlated with the probability of reporting innovation, with a larger effect size for product than for process innovations. Moreover, micro firms benefit in a comparable way from innovation processes as larger firms, as they are similarly able to increase their labor productivity. Overall, the link between R&D, innovation, and productivity in micro firms does not largely differ from their larger counterparts.

223 citations


Journal ArticleDOI
TL;DR: In this article, the authors estimate a dynamic model of employment, human capital accumulation, and savings for women in the United Kingdom, exploiting tax and benefit reforms, and use it to analyze the effects of welfare policy.
Abstract: We estimate a dynamic model of employment, human capital accumulation—including education, and savings for women in the United Kingdom, exploiting tax and benefit reforms, and use it to analyze the effects of welfare policy. We find substantial elasticities for labor supply and particularly for lone mothers. Returns to experience, which are important in determining the longer-term effects of policy, increase with education, but experience mainly accumulates when in full-time employment. Tax credits are welfare improving in the U.K., increase lone-mother labor supply and marginally reduce educational attainment, but the employment effects do not extend beyond the period of eligibility. Marginal increases in tax credits improve welfare more than equally costly increases in income support or tax cuts.

204 citations


Journal ArticleDOI
TL;DR: In this article, the authors studied the long-run trends in female employment, working hours, and relative wages for a wide cross-section of developed economies and showed that the growth in the service share can explain at least half of the overall variation in female hours, both over time and across countries.
Abstract: Women in developed economies have made major advancements in labor markets throughout the past century, but remaining gender differences in pay and employment seem remarkably persistent. This article documents long-run trends in female employment, working hours, and relative wages for a wide cross section of developed economies. It reviews existing work on the factors driving gender convergence, and novel perspectives on remaining gender gaps. Finally, the article emphasizes the interplay between gender trends and the evolution of the industry structure. Based on a shift-share decomposition, it shows that the growth in the service share can explain at least half of the overall variation in female hours, both over time and across countries.

200 citations


Posted Content
TL;DR: For example, this article showed that Chinese housing prices rose by over 10 percent per year in real terms between 2003 and 2014, and are now between two and ten times higher than the construction cost of apartments.
Abstract: Chinese housing prices rose by over 10 percent per year in real terms between 2003 and 2014, and are now between two and ten times higher than the construction cost of apartments. At the same time, Chinese developers built 100 billion square feet of residential real estate. This boom has been accompanied by a large increase in the number of vacant homes, held by both developers and households. This boom may turn out to be a housing bubble followed by a crash, yet that future is far from certain. The demand for real estate in China is so strong that current prices might be sustainable, especially given the sparse alternative investments for Chinese households, so long as the level of new supply is radically curtailed. Whether that happens depends on the policies of the Chinese government, which must weigh the benefits of price stability against the costs of restricting urban growth.Institutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at www.nber.org.

180 citations


Journal ArticleDOI
TL;DR: This article found that the inflow of immigrants into a community has a significant impact on the increase in the community's voting share for the FPO, explaining roughly a tenth of the regional variation in vote changes.
Abstract: Does the presence of immigrants in one's neighbourhood affect voting for far right-wing parties? We study the case of the Freedom Party of Austria (FPO) which, under the leadership of Jorg Haider, increased its vote share from less than 5 percent in the early 1980s to 27 percent by the end of the 1990s and continued to attract more than 20 percent of voters in the 2013 national election. We find that the inflow of immigrants into a community has a significant impact on the increase in the community's voting share for the FPO, explaining roughly a tenth of the regional variation in vote changes. Our results suggest that voters worry about adverse labor market effects of immigration, as well as about the quality of their neighbourhood. In fact, we find evidence of a negative impact of immigration on "compositional amenities." In communities with larger immigration influx, Austrian children commute longer distances to school, and fewer daycare resources are provided. We do not find evidence that Austrians move out of communities with increasing immigrant presence.

Posted Content
TL;DR: This paper examined the impact of an exogenous immigration-induced labor supply shock on local wages and employment of Czech workers along the German-Czech border and found that the employment response is almost entirely driven by diminished inflows of natives into work rather than outflows into other areas or non-employment.
Abstract: By exploiting a commuting policy that led to a sharp and unexpected inflow of Czech workers to areas along the German-Czech border, we examine the impact of an exogenous immigration-induced labor supply shock on local wages and employment of natives. On average, the supply shock leads to a moderate decline in local native wages and a sharp decline in local native employment. These average effects mask considerable heterogeneity across groups: while younger natives experience larger wage effects, employment responses are particularly pronounced for older natives. This pattern is inconsistent with standard models of immigration but can be accounted for by a model that allows for a larger labor supply elasticity or a higher degree of wage rigidity for older than for young workers. We further show that the employment response is almost entirely driven by diminished inflows of natives into work rather than outflows into other areas or non-employment, suggesting that "outsiders" shield"insiders" from the increased competition.

Journal ArticleDOI
TL;DR: In this paper, the authors investigate how cognitive ability and character skills influence behavior, success and the evolution of play towards Nash equilibrium in repeated strategic interactions and find that more cognitively able subjects choose numbers closer to equilibrium, converge more frequently to equilibrium play and earn more even as behavior approaches the equilibrium prediction.
Abstract: In this paper we investigate how cognitive ability and character skills influence behavior, success and the evolution of play towards Nash equilibrium in repeated strategic interactions. We study behavior in a p-beauty contest experiment and find striking differences according to cognitive ability: more cognitively able subjects choose numbers closer to equilibrium, converge more frequently to equilibrium play and earn more even as behavior approaches the equilibrium prediction. To understand better how subjects with different cognitive abilities learn differently, we estimate a structural model of learning based on level-k reasoning. We find a systematic positive relationship between cognitive ability and levels; furthermore, the average level of more cognitively able subjects responds positively to the cognitive ability of their opponents, while the average level of less cognitively able subjects does not respond. Finally, we compare the influence of cognitive ability to that of character skills, and find that both cognition and personality affect behavior and learning. More agreeable and emotionally stable subjects perform better and learn faster, although the effect of cognitive ability on behavior is stronger than that of character skills.

Posted ContentDOI
TL;DR: In this article, the authors make a comparison between the United States and Canada in order to illustrate how the configuration of the forces determining the transmission of inequality across generations differs in spite of the fact that both of these countries share many other things in common, particularly the importance and meaning of equality of opportunity and the role of individual hard work and motivation.
Abstract: To understand the degree of intergenerational mobility in the United States, and the differences between Americans and others, it is important to appreciate the workings and interaction of three fundamental institutions: the family, the market, and the state. But comparisons can also be misleading. The way in which families, labor markets, and government policy determine the life chances of children is complicated; the result of a particular history, societal values, and the nature of the political process. It might be one thing to say that the United States has significantly less intergenerational mobility than Denmark or Norway, but it is entirely another thing to suggest that these countries offer templates for the conduct of public policy that can be applied on this side of the Atlantic. There is no way to get from here to there.It is helpful to focus on a particularly apt comparison, that between the United States and Canada, in order to illustrate how the configuration of the forces determining the transmission of inequality across generations differs in spite of the fact that both of these countries share many other things in common, particularly the importance and meaning of equality of opportunity and the role of individual hard work and motivation.

Journal ArticleDOI
TL;DR: A positive and significant effects of child care availability on both mothers’ working status and children’s Language test scores are indicated and the impact of a percentage change in public child care on mothers�’ employment and children's Language test score is greater in provinces where child care available is more limited.
Abstract: This paper investigates the effects of public child care availability in Italy in mothers’ working status and children’s scholastic achievements. We use a newly available dataset containing individual standardized test scores of pupils attending the second grade of primary school in 2009–2010 in conjunction with data on public child care availability. Our estimates indicate a positive and significant effects of child care availability on both mothers’ working status and children’s Language test scores. We find that a percentage change in public child care coverage increases mothers’ probability to work by 1.3 percentage points and children’s Language test scores by 0.85 percent of one standard deviation; we do not find any effect on Math test scores. Moreover, the impact of a percentage change in public child care on mothers’ employment and children’s Language test scores is greater in provinces where child care availability is more limited.

Journal ArticleDOI
TL;DR: The authors found that workers earn higher wages and are less inclined to leave their firms if they have obtained their job through a referral, suggesting that firms and workers learn about workers' productivity over time.
Abstract: This article derives novel testable implications of referral-based job search networks in which employees provide employers with information about potential new hires that they otherwise would not have. Using comprehensive matched employer–employee data covering the entire workforce in one large metropolitan labour market combined with unique survey data linked to administrative records, we provide evidence that workers earn higher wages and are less inclined to leave their firms if they have obtained their job through a referral. These effects are particularly strong at the beginning of the employment relationship and decline with tenure in the firm, suggesting that firms and workers learn about workers' productivity over time. Overall, our findings imply that job search networks help to reduce informational deficiencies in the labour market and lead to productivity gains for workers and firms.

Journal ArticleDOI
TL;DR: In this paper, the authors use a long series of Swedish income data to show that the lifetime bias is large and examine current strategies to reduce it, concluding that the bias is smallest when incomes are measured around midlife, a central implication from a widely adopted generalization of the classical errors in-variables model.
Abstract: Using short snapshots of income in intergenerational mobility estimation causes “lifecycle bias” if the snapshots cannot mimic lifetime outcomes. We use uniquely long series of Swedish income data to show that this bias is large and to examine current strategies to reduce it. We confirm that lifecycle bias is smallest when incomes are measured around midlife, a central implication from a widely adopted generalization of the classical errors-in-variables model. However, the model cannot predict the ideal age of measurement or eliminate lifecycle bias at other ages. We illustrate how extensions of this model can reduce the bias further.

Journal ArticleDOI
TL;DR: In this article, the authors adopt correspondence testing to investigate the impact of usually unobservable variables, such as personality traits that are more commonly associated with men than women in general.
Abstract: This paper goes one step further than previous experimental studies by adopting correspondence testing to investigate the impact of usually unobservable variables. When testing for discrimination it may not be sufficient to control for human capital only. Specific personality traits that are more commonly associated with men than women in general seem to contribute to success particularly in many attractive, highly paid jobs. A successful manager, for example, is supposed to be ambitious, competitive, and dominant, which are stereotypically masculine traits. Alternatively, stereotypically feminine characteristics are preferred in many traditionally female occupations. A good nurse or kindergarten teacher, for example, seems to require

Posted Content
TL;DR: This paper examined distributions and life cycles of citations, compared citation histories of articles in different sub-specialties in economics and present evidence on the history and heterogeneity of those journals' impacts and the marginal citation productivity of additional coauthors.
Abstract: I describe and compare sources of data on citations in economics and the statistics that can be constructed from them. Constructing data sets of the post-publication citation histories of articles published in the "Top 5" journals in the 1970s and the 2000s, I examine distributions and life cycles of citations, compare citation histories of articles in different sub-specialties in economics and present evidence on the history and heterogeneity of those journals' impacts and the marginal citation productivity of additional coauthors.I use a new data set of the lifetime citation histories of over 1000 economists from 30 universities to rank economics departments by various measures and to demonstrate the importance of intra- and interdepartmental heterogeneity in productivity. Throughout, the discussion summarizes earlier work. I survey research on the impacts of citations on salaries and non-monetary rewards and discuss how citations reflect judgments about research quality in economics.

Journal ArticleDOI
TL;DR: The authors conducted a real-effort experiment with workers whose mission preferences are known, randomly assigning them to organizations with clear missions to create both matches and mismatches, and found that matching is a strong motivator, especially compared to mismatches.
Abstract: Economic theory predicts that agents work harder if they believe in the mission of the organization. We conduct a real-effort experiment with workers whose mission preferences are known, randomly assigning them to organizations with clear missions to create both matches and mismatches. Our estimates suggest that matching is a strong motivator, especially compared to mismatches. Further, we find that performance pay increases effort, though mostly among mismatched workers who substitute pay for matching. Our results suggest the importance of defining a clear mission to an organization and highlight the significance of sorting, screening, and compensation policies.

Posted Content
TL;DR: The authors show that people lie surprisingly little and formalize a wide range of potential explanations for the observed behavior, identify testable predictions that can distinguish between the models and conduct new experiments to do so.
Abstract: Private information is at the heart of many economic activities. For decades, economists have assumed that individuals are willing to misreport private information if this maximizes their material payoff. We combine data from 72 experimental studies in economics, psychology and sociology, and show that, in fact, people lie surprisingly little. We then formalize a wide range of potential explanations for the observed behavior, identify testable predictions that can distinguish between the models and conduct new experiments to do so. None of the most popular explanations suggested in the literature can explain the data. We show that only combining a preference for being honest with a preference for being seen as honest can organize the empirical evidence.

Journal ArticleDOI
TL;DR: This study uses Monte Carlo simulations to demonstrate that regression-discontinuity designs arrive at biased estimates when attributes related to outcomes predict heaping in the running variable.
Abstract: This study uses Monte Carlo simulations to demonstrate that regression‐discontinuity designs arrive at biased estimates when attributes related to outcomes predict heaping in the running variable. After showing that our usual diagnostics may not be well suited to identifying this type of problem, we provide alternatives, and then discuss the usefulness of different approaches to addressing the bias. We then consider these issues in multiple non‐simulated environments.

Journal ArticleDOI
01 Jan 2016
TL;DR: The authors showed that if the source of heterogeneity and omitted variable are jointly independent of policy or treatment, then the OLS estimate on the interaction term between the treatment and endogenous factor turns out to be consistent.
Abstract: Whether interested in the differential impact of a particular factor in various institutional settings or in the heterogeneous effect of policy or random experiment, the empirical researcher confronts a problem if the factor of interest is correlated with an omitted variable. This paper presents the circumstances under which it is possible to arrive at a consistent estimate of the mentioned effect. We find that if the source of heterogeneity and omitted variable are jointly independent of policy or treatment, then the OLS estimate on the interaction term between the treatment and endogenous factor turns out to be consistent.

Posted Content
TL;DR: In this article, the impact of international trade exposure on individual earnings profiles in heterogeneous worker-establishment matches was analyzed using a high-dimensional fixed effects approach to analyze endogenous mobility between plants, industries, and regions in response to trade shocks.
Abstract: This paper addresses the impact of rising international trade exposure on individual earnings profiles in heterogeneous worker-establishment matches. We exploit rich panel data on job biographies of manufacturing workers in Germany, and apply a high-dimensional fixed effects approach to analyze endogenous mobility between plants, industries, and regions in response to trade shocks. Rising import penetration reduces earnings within job spells, and it induces workers to leave the exposed industries. Intra-industry mobility to other firms or regions are far less common adjustments. This induced industry mobility mitigates the adverse impacts of import shocks in the workers' subsequent careers, but their cumulated earnings over a longer time horizon are still negatively affected. By contrast, we find much less evidence for sorting into export-oriented industries, but the earnings gains mostly arise within job spells. These results point at an asymmetry in the individual labour market response to trade shocks: Import shocks trigger substantial "push effects", whereas the "pull effects" of export shocks are weaker.

Journal ArticleDOI
TL;DR: This paper found that absence rates are approximately five percent higher among workers who report being in poor mental health, and job conditions are related to both presenteeism and absenteeism even after accounting for workers self-reported mental health status.
Abstract: Much of the economic cost of mental illness stems from workers’ reduced productivity. We analyze the links between mental health and two alternative workplace productivity measures – absenteeism and presenteeism (i.e., lower productivity while attending work) – explicitly allowing these relationships to be moderated by the nature of the job itself. We find that absence rates are approximately five percent higher among workers who report being in poor mental health. Moreover, job conditions are related to both presenteeism and absenteeism even after accounting for workers’ self-reported mental health status. Job conditions are relatively more important in understanding diminished productivity at work if workers are in good rather than poor mental health. The effects of job complexity and stress on absenteeism do not depend on workers’ mental health, while job security and control moderate the effect of mental illness on absence days.

Posted Content
TL;DR: In this article, the authors used variation in the details and timing of state and local BTB policies to test BTB's effects on employment for various demographic groups, and found that when an applicant's criminal history is unavailable, employers statistically discriminate against demographic groups that include more ex-offenders.
Abstract: Jurisdictions across the United States have adopted “ban the box” (BTB) policies preventing employers from conducting criminal background checks until late in the job application process. Their goal is to improve employment outcomes for those with criminal records, with a secondary goal of reducing racial disparities in employment. However, removing information about job applicants’ criminal histories could lead employers who don’t want to hire ex-offenders to guess who the ex-offenders are, and avoid interviewing them. In particular, employers might avoid interviewing young, low-skilled, black and Hispanic men when criminal records are not observable, guessing that these applicants are more likely to be ex-offenders. This would exacerbate racial disparities in employment. In this paper, we use variation in the details and timing of state and local BTB policies to test BTB’s effects on employment for various demographic groups. We find that BTB policies decrease the probability of being employed by 3.4 percentage points (5.1%) for young, low-skilled black men, and by 2.3 percentage points (2.9%) for young, low-skilled Hispanic men. These findings support the hypothesis that when an applicant’s criminal history is unavailable, employers statistically discriminate against demographic groups that include more ex-offenders.

Posted Content
TL;DR: In this paper, a natural experiment was conducted to identify the causal effect of exposure to refugees in the neighborhood on the support for far-right, nationalist, anti-immigration parties.
Abstract: This paper studies a natural experiment to identify the causal effect of exposure to refugees in the neighborhood on the support for far-right, nationalist, anti-immigration parties. In the state elections in an Austrian state in September 2015 the far-right Freedom Party of Austria (FPOE) doubled its vote share with a fierce anti-asylum campaign. Since only 42 percent of communities hosted refugees at the time of the election, exposure to refugees varied at the local level. To account for the potential endogeneity in the distribution of refugees, I use pre-existing group accommodations as instrumental variable. To cope with the sudden inflow of large numbers of refugees, these buildings were used to accommodate refugees and thus strongly increase the probability of refugee presence in a community. In line with the contact hypothesis I find that hosting refugees dampens the overall trend and decreases FPOE support by 4.42 percentage points. Further analysis using exit poll data reveals a positive effect on the optimism in the population that the integration of refugees can be managed. Placebo tests show that there were no effects in elections prior to 2015.

Posted Content
TL;DR: In this article, the relevance and mechanics of consumption network effects are studied and the estimated effects are statistically significant and relevant for policies as they generate non-negligible multiplier effects.
Abstract: In this paper we study the relevance and mechanics of consumption network effects. We use long panel data on the entire Danish population to construct a measure of consumption based on administrative tax records, and define the peer groups in terms of workplace, occupation, education, and age. We then apply an IV strategy, and fixed effect models, to recover the effects. Our instruments arise naturally from the network structure and firms shocks. The estimated effects are statistically significant and relevant for policies as they generate non-negligible multiplier effects. Further, the results are consistent with a "Keeping-up" model.

Posted Content
TL;DR: In this paper, the authors provide an introduction to the estimation of marginal treatment effects (MTE) using a generalized Roy model based on the potential outcomes framework, within which they define different treatment effects of interest and review the well-known case of IV estimation with a discrete instrument resulting in a local average treatment effect.
Abstract: This paper provides an introduction into the estimation of Marginal Treatment Effects (MTE). Compared to the existing surveys on the subject, our paper is less technical and speaks to the applied economist with a solid basic understanding of econometric techniques who would like to use MTE estimation. Our framework of analysis is a generalized Roy model based on the potential outcomes framework, within which we define different treatment effects of interest, and review the well-known case of IV estimation with a discrete instrument resulting in a local average treatment effect (LATE). Turning to IV estimation with a continuous instrument we demonstrate that the 2SLS estimator may be viewed as a weighted average of LATEs, and discuss MTE estimation as an alternative and more informative way of exploiting a continuous instrument. We clarify the assumptions underlying the MTE framework and illustrate how the MTE estimation is implemented in practice.

Posted Content
TL;DR: This paper showed that the main nonparametric identification finding of Abbring and Van den Berg (2003b, Econometrica) for the effect of a timing-chosen treatment on an event duration of interest does not hold.
Abstract: We show that the main nonparametric identification finding of Abbring and Van den Berg (2003b, Econometrica) for the effect of a timing-chosen treatment on an event duration of interest does not hold. The main problem is that the identification is based on the competing-risks identification result of Abbring and Van den Berg (2003a, Journal of the Royal Statistical Society, Series B) that requires independence between the waiting duration until treatment and the event duration, but the independence assumption does not hold unless there is no treatment effect. We illustrate the problem using constant hazards (i.e., exponential distribution), and as it turns out, there is no constant-hazard data generating process satisfying the assumptions in Abbring and Van den Berg (2003b, Econometrica) so long as the effect is not zero. We also suggest an alternative causal model.