ECON 416 Lecture 7: Lecture 7
30 Nov 2017
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Supply of capital in rural villages is typically in the hands of a single. Labor regulations make firms smaller than what they would otherwise wealthy lender: not a competitive market be. For both groups we only observe one potential outcome, the realized one. By comparing differences, we are getting the causal effect of treatment on the treated plus the selection bias . The selection bias captures baseline differences between treated (t i =1) and non- treated (t i =0) which are there even in absence of the treatment. If these differences are there, treated individuals are special and thus not comparable to the others to begin with. All examples in which protected individuals were different to begin with: Notice that the absence of selection bias implies. This is because individuals self select into treatment or treatment not gonna get the causal effect right is offered to a select sample of individuals.
