Econometrica: Sep, 2012, Volume 80, Issue 5

Partial Distributional Policy Effects

https://doi.org/10.3982/ECTA9671
p. 2269-2301

Christoph Rothe

In this paper, we propose a method to evaluate the effect of a counterfactual change in the unconditional distribution of a single covariate on the unconditional distribution of an outcome variable of interest. Both fixed and infinitesimal changes are considered. We show that such effects are point identified under general conditions if the covariate affected by the counterfactual change is continuously distributed, but are typically only partially identified if its distribution is discrete. For the latter case, we derive informative bounds, making use of the available information. We also discuss estimation and inference.