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IZA Discussion Paper No. 15159
March 2022
Clustered Local Average Treatment Effects: Fields of Study and Academic Student Progress

Multiple unordered treatments with a binary instrument for each treatment are common in policy evaluation. This multiple treatment setting allows for different types of changes in treatment status that are non-compliant with the activated instrument. Therefore, instrumental variable (IV) methods have to rely on strong assumptions on the subjects' behavior to identify local average treatment effects (LATEs). This paper introduces a new IV strategy that identifies an interpretable weighted average of LATEs under relaxed assumptions, in the presence of clusters with similar treatments. The clustered LATEs allow for shifts across treatment clusters that are consistent with preference updating, but render IV estimation of individual LATEs biased. The clustered LATEs are estimated by standard IV methods, and we provide an algorithm that estimates the treatment clusters. We empirically analyze the effect of fields of study on academic student progress, and find violations of the LATE assumptions in line with preference updating, clusters with similar fields, treatment effect heterogeneity across students, and significant differences in student progress due to fields of study.

Kommunikation
Mark Fallak
mark.fallak@liser.lu
+352 585-855-526
World of Labour
Olga Nottmeyer
olga.nottmeyer@liser.lu
+352 585-855-501
Netzwerkkoordination
Christina Gathmann
christina.gathmann@liser.lu

Das IZA@LISER-Netzwerk ist eine weltweite Gemeinschaft für exzellente Forschung in der Arbeitsmarktökonomie und angrenzenden Fachgebieten. Nach dem Wechsel von Bonn wird das Netzwerk nun am Luxembourg Institute of Socio-Economic Research (LISER) koordiniert.

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