TY  - RPRT
        AU  - Sloczynski, Tymon
AU  - Sun, Liyang
AU  - Uysal, Derya
        TI  - A Practical Guide to Instrumental Variables Methods with Heterogeneous Treatment Effects
        PY  - 2026/May/
        PB  - Institute of Labor Economics (IZA)
        CY  - Bonn
        T2  - IZA Discussion Paper
        IS  - 18684
        UR  - https://www.iza.org/index.php/publications/dp18684
        AB  - Instrumental variables (IV) methods are central to applied microeconomics. While classical approaches assume linear models with constant effects, recent literature has shifted toward the local average treatment effect (LATE) framework to accommodate heterogeneous treatment effects. This paper provides a practical guide to aligning empirical practice with recent theory. We first examine how different specifications with covariates lead to distinct weighted averages of covariate-specific LATEs. We then discuss how parametric misspecification can undermine the causal interpretation of these estimands and suggest flexible specifications as essential robustness checks. Finally, we review formal tests for LATE assumptions and methods robust to monotonicity violations. We provide a guide to software implementations to help researchers apply the methods in practice.
        KW  - instrumental variables
KW  - local average treatment effect
KW  - heterogeneous treatment effects
KW  - two-stage least squares
KW  - double machine learning
KW  - monotonicity
KW  - instrument validity
        ER  -