Working Paper: NBER ID: w20781
Authors: Joseph G. Altonji; Richard K. Mansfield
Abstract: We consider the classic problem of estimating group treatment effects when individuals sort based on observed and unobserved characteristics that affect the outcome. Using a standard choice model, we show that controlling for group averages of observed individual characteristics potentially absorbs all the across-group variation in unobservable individual characteristics. We use this insight to bound the treatment effect variance of school systems and associated neighborhoods for various outcomes. Across four datasets, our most conservative estimates indicate that a 90th versus 10th percentile school system increases the high school graduation probability by between 0.047 and 0.085 and increases the college enrollment probability by between 0.11 and 0.13. We also find large effects on adult earnings. We discuss a number of other applications of our methodology, including measurement of teacher value-added.
Keywords: Group treatment effects; School effects; Neighborhood effects; Causal inference; Educational outcomes
JEL Codes: C20; I20; I24; I26; R20
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| moving from a 10th percentile school system (I24) | high school graduation (I23) |
| moving from a 10th percentile school system (I24) | college enrollment (I23) |
| school quality differences (I24) | adult earnings (J31) |
| school and neighborhood effects (I24) | individual outcomes (I14) |