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Exogenous treatment and endogenous factors: vanishing of omitted variable bias on the interaction term

Nizalova, Olena, Murtazashvili, Irina (2016) Exogenous treatment and endogenous factors: vanishing of omitted variable bias on the interaction term. Journal of Econometric Methods, 5 (1). pp. 71-77. ISSN 2194-6345. E-ISSN 2156-6674. (doi:10.1515/jem-2013-0012) (KAR id:46746)

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https://doi.org/10.1515/jem-2013-0012

Abstract

Whether interested in the differential impact of a particular factor in various institutional settings or in the heterogeneous effect of policy or random experiment, the empirical researcher confronts a problem if the factor of interest is correlated with an omitted variable. This paper presents the circumstances under which it is possible to arrive at a consistent estimate of the mentioned effect. We find that if the source of heterogeneity and omitted variable are jointly independent of policy or treatment, then the OLS estimate on the interaction term between the treatment and endogenous factor turns out to be consistent.

Item Type: Article
DOI/Identification number: 10.1515/jem-2013-0012
Uncontrolled keywords: heterogeneity; interaction term; omitted variable bias; random experiments; treatment effect
Subjects: H Social Sciences > HB Economic Theory
Divisions: Faculties > Social Sciences > School of Social Policy Sociology and Social Research > Personal Social Services Research Unit
Faculties > Social Sciences > School of Social Policy Sociology and Social Research > Centre for Health Services Studies
Depositing User: Olena Nizalova
Date Deposited: 20 Jan 2015 10:21 UTC
Last Modified: 28 Oct 2019 10:03 UTC
Resource URI: https://kar.kent.ac.uk/id/eprint/46746 (The current URI for this page, for reference purposes)
Nizalova, Olena: https://orcid.org/0000-0002-1704-2632
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