General Equilibrium Treatment Effects: A Study of Tuition Policy
16 Pages Posted: 1 Sep 2000 Last revised: 23 Jan 2022
Date Written: February 1998
Abstract
This paper defines and estimates general equilibrium treatment effects. The conventional approach in the literature on treatment effects ignores interactions among individuals induced by the policy interventions being studied. Focusing on the impact of tuition policy, and using estimates from our dynamic overlapping generations general equilibrium model of capital and human capital formation, we find that general equilibrium impacts of tuition on college enrollment are an order of magnitude smaller than those reported in the literature on microeconomic treatment effects. The assumptions used to justify the LATE parameter in a partial equilibrium setting do not hold in a general equilibrium setting. Policy changes induce two way flows. We extend the LATE concept to a general equilibrium setting. We present a more comprehensive evaluation to program evaluation by considering both the tax and benefit consequences of the program being evaluated and placing the analysis in a market setting.
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
Identification and Estimation of Local Average Treatment Effects
By Joshua D. Angrist and Guido W. Imbens
-
Estimating the Return to Schooling: Progress on Some Persistent Econometric Problems
By David Card
-
By James J. Heckman, Lance Lochner, ...
-
Life Cycle Schooling and Dynamic Selection Bias: Models and Evidence for Five Cohorts
-
By James J. Heckman and Edward Vytlacil
-
Earnings, Schooling, and Ability Revisited
By David Card