Identification and Estimation of Intensive Margin Effects by Difference-in-Difference Methods

• Main Authors: Hersche Markus, Moor Elias
• Format: Article
• Language: English
• Published: De Gruyter 2020-12-01
• Series: Journal of Causal Inference
• Subjects: intensive margin effect; difference-in-difference; corner solutions; policy evaluation; 62d20; 62p20
• Online Access: https://doi.org/10.1515/jci-2019-0035

This paper discusses identification and estimation of causal intensive margin effects. The causal intensive margin effect is defined as the treatment effect on the outcome of individuals with a positive outcome irrespective of whether they are treated or not, and is of interest for outcomes with corner solutions. The main issue is to deal with a potential selection problem that arises when conditioning on positive outcomes. We propose using difference-in-difference methods - conditional on positive outcomes - to estimate causal intensive margin effects. We derive sufficient conditions under which the difference-in-difference estimator identifies the causal intensive margin effect. We apply the methodology to estimate the causal intensive margin effect of reaching the full retirement age on working hours.