Can Variation in Subgroups&Apos; Average Treatment Effects Explain Treatment Effect Heterogeneity? Evidence from a Social Experiment

35 Pages Posted: 19 May 2014

See all articles by Marianne P. Bitler

Marianne P. Bitler

University of California, Davis - Departments of Economics and Agricultural Resource Economics; National Bureau of Economic Research (NBER); IZA Institute of Labor Economics

Jonah B. Gelbach

University of California, Berkeley - School of Law

Hilary Williamson Hoynes

University of California, Berkeley; National Bureau of Economic Research (NBER); IZA Institute of Labor Economics

Date Written: May 2014

Abstract

In this paper, we assess whether welfare reform affects earnings only through mean impacts that are constant within but vary across subgroups. This is important because researchers interested in treatment effect heterogeneity typically restrict their attention to estimating mean impacts that are only allowed to vary across subgroups. Using a novel approach to simulating treatment group earnings under the constant mean-impacts within subgroup model, we find that this model does a poor job of capturing the treatment effect heterogeneity for Connecticut's Jobs First welfare reform experiment using quantile treatment effects. Notably, ignoring within-group heterogeneity would lead one to miss evidence that the Jobs First experiment's effects are consistent with central predictions of basic labor supply theory.

Suggested Citation

Bitler, Marianne P. and Gelbach, Jonah B. and Hoynes, Hilary Williamson, Can Variation in Subgroups&Apos; Average Treatment Effects Explain Treatment Effect Heterogeneity? Evidence from a Social Experiment (May 2014). NBER Working Paper No. w20142, Available at SSRN: https://ssrn.com/abstract=2438563

Marianne P. Bitler (Contact Author)

University of California, Davis - Departments of Economics and Agricultural Resource Economics ( email )

United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Jonah B. Gelbach

University of California, Berkeley - School of Law ( email )

215 Boalt Hall
Berkeley, CA 94720-7200
United States

Hilary Williamson Hoynes

University of California, Berkeley ( email )

310 Barrows Hall
Berkeley, CA 94720
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

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