Methods in Labor Economics

There are discontinuities at other values of the

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Unformatted text preview: reatment values of the outcome and the treatment 2. There are discontinuities at other values of the assignment variable External validity Are cases near the cutpoint different from cases far from the cutpoint in other 3. Manipulation of the assignment variable If individuals have control over the assignment variable, then we should expect them to sort into (out of) treatment if treatment is desirable (undesirable) If individuals have precise control over the assignment variable, we would expect the density of X to be zero just below the threshold but positive just above the threshold (assuming the treatment is desirable). Test for continuity in the density of the assignment variable at the cutoff 160 THEAMERICAN CONOMIC EVIEW R E MARCH2006 Local Averages and Parametric Fit 17 Education 16 Full-Time Left 15 Age Avg. 149 1935 1940 1945 1950 YearAged 14 LocalAverage 1955 1960 1965 F Polynomial it BY A 4. EDUCATION YEAR GED14 FIGURE AVERAGEGELEvrFULL-TIME A (Great Britain) Note: Local averages are plotted for British-bornadults aged 32 to 64 from the 1983 to 1998 GeneralHousehold Surveys. The curved line shows the predictedfit from regressingaverage age left full-time education on a birth cohort quartic polynomial and an indicator for the school-leaving age faced at age 14. The school-leaving age increasedfrom 14 to 15 in 1947, indicated by the vertical line. the school-leavingage from 14 to 15. In Northern Ireland, however, the change was not implemented until 1957 due to political stonewalling. Figure 2 chartsthe proportionof NorthernIrish youths dropping out at age 14 and the total d proportion roppingout at age 15 or younger.A clear break can be seen for portion of early school-leavers in 1957. By this time, the fraction of 14-year-old school-leavers had already gone down by 11.1 percentagepoints from its 1946 level, but this was still a striking drop in this variable, around39.8 percentagepoints, in just two years.10 10 Bernbaum (1967) discusses the degree of disruption caused by WorldWar II, especially to those evacuatedfrom...
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