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Instrumental variables with unordered treatments: Theory and evidence from returns to fields of study

Eskil Heinesen, Christian Hvid, Lars Kirkebøen, Edwin Leuven, Magne Mogstad

arXiv 1 Sep 2022 · Econometrics · publishedJournal of Labor Economics (2024) · 4 citations (OpenAlex)

arXiv:2209.00417 · PDF · DOI · OpenAlex · Extracted main text

Abstract

We revisit the identification argument of Kirkeboen et al. (2016) who showed how one may combine instruments for multiple unordered treatments with information about individuals' ranking of these treatments to achieve identification while allowing for both observed and unobserved heterogeneity in treatment effects. We show that the key assumptions underlying their identification argument have testable implications. We also provide a new characterization of the bias that may arise if these assumptions are violated. Taken together, these results allow researchers not only to test the underlying assumptions, but also to argue whether the bias from violation of these assumptions are likely to be economically meaningful. Guided and motivated by these results, we estimate and compare the earnings payoffs to post-secondary fields of study in Norway and Denmark. In each country, we apply the identification argument of Kirkeboen et al. (2016) to data on individuals' ranking of fields of study and field-specific instruments from discontinuities in the admission systems. We empirically examine whether and why the payoffs to fields of study differ across the two countries. We find strong cross-country correlation in the payoffs to fields of study, especially after removing fields with violations of the assumptions underlying the identification argument.

Citation extraction

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Most heavily cited references

The works this paper leans on most, across its whole bibliography — not restricted to papers in our corpus. Ranked by composite intensity, which combines how often a work is mentioned, how many sections mention it, and how much of that falls in the main text rather than the appendix.

ReferenceIntensityMentionsSectionsMain text
1Nibbering, D., Oosterveen, M., and Silva, P. L (2022) Clustered local average treatment effects: fields of study and academic student progress0.69351100%
2Kirkeboen, L. J., Leuven, E., and Mogstad, M (2016) Field of study, earnings, and self-selection self0.68323196%
3Imbens, G. W. and Angrist, J. D (1994) Identification and estimation of local average treatment effects0.58531100%
4Altonji, J. G., Blom, E., and Meghir, C (2012) Heterogeneity in human capital investments: High school curriculum, college major, and careers0.40511100%
5Altonji, J. G., Arcidiacono, P., and Maurel, A (2016) The analysis of field choice in college and graduate school: Determinants and wage effects0.40511100%
6Duflo, E., Glennerster, R., and Kremer, M (2007) Using randomization in development economics research: A toolkit0.40511100%
7Heckman, J. J., Urzúa, S. S., and Vytlacil, E. J (2006) Understanding instrumental variables in models with essential heterogeneity0.40511100%
8Heckman, J. J. and Urzúa, S. S (2010) Comparing IV with structural models: What simple IV can and cannot identify0.40511100%
9Kamat, V (2017) Identification with latent choice sets: The case of the head start impact study0.40511100%
10Lee, S. and Salanié, B (2020) Filtered and unfiltered treatment effects with targeting instruments0.40511100%

Showing the top 10 of 13 scored citations.

Cited by, within the corpus

arXiv econ.EM papers that cite this one, ranked by how heavily they lean on it.

Citing paperIntensityMentionsSections
12SLS with Multiple Treatments0.84343
2The Cascade Identity: 2SLS as a Policy Parameter in Capacity-Constrained Settings0.51121
3Treatment Effects with Targeting Instruments0.40511
4Sharp Testable Implications of Encouragement Designs0.40511