General Equilibrium Treatment Effects: A Study of Tuition Policy
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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.
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The system can respond in ways that undo intervention effects, if, for example, a teacher raises the curve in response to improved grades.
“And the system can respond in ways that undo intervention effects, if, for example, a teacher raises the curve in response to improved grades”
From The Psychology of Change: Self-Affirmation and Social Psychological Intervention (2014) · cites this paper as Heckman et al. 1998
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Self-citation
- Authors
- Heckman, J., Lochner, L., & Taber, C.
- Affiliations
- University of Chicago (US)
- Western University (CA)
- National Bureau of Economic Research (US)
- Venue
- National Bureau of Economic Research
- Publisher
- National Bureau of Economic Research
- Published
- 1998-02
- Volume
- 88
- Issue
- 2
- Pages
- 381-386
- OpenAlex
- W2012221530
- Cited by
- 289
- References
- 0
- Citations by year
- 2026: 1 · 2025: 3 · 2024: 3 · 2023: 6 · 2022: 4 · 2021: 7 · 2020: 4 · 2019: 6 · 2018: 4 · 2017: 7 · 2016: 11 · 2015: 10 · 2014: 14 · 2013: 14 · 2012: 13
- Type
- report
- Language
- en
- Open access
- green
- doi.org
- Locations
- National Bureau of Economic Research (publishedVersion)
- RePEc: Research Papers in Economics (submittedVersion)
- American Economic Review (submittedVersion)
- Topics
- Physical Sciences › Mathematics › Statistics and Probability › Advanced Causal Inference Techniques
- Social Sciences › Education › School Choice and Performance
- Social Sciences › Decision Sciences › Management Science and Operations Research › Evaluation and Performance Assessment
- Keywords
- tuition policy, college enrollment, local average treatment effect, overlapping generations model, human capital accumulation, capital formation, program evaluation
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