Salle 3001

Maksim Smirnov (LSE) “Treatment effects identification and testing via reduced-form projections”

Abstract: I study a nonparametric instrumental variable (IV) model with a binary treatment and develop new methods for testing treatment effect heterogeneity. In particular, I propose tests for (i) constant marginal treatment effects (MTE) and (ii) monotone decreasing MTE curves. The analysis builds on a novel identification result showing that the average second derivative of a regression function can be recovered via a quadratic projection. This result enables identification of the average slope of the MTE curve through a reduced-form projection. Building on these insights, I construct simple, projection-based tests for constant and monotone MTEs that are easy to implement and have direct implications for policy evaluation and welfare maximization. Monte Carlo simulations and an empirical application demonstrate the tests’ finite-sample performance and practical relevance.