General Equilibrium Treatment Effects: A Study of Tuition Policy / James J. Heckman, Lance Lochner, Christopher Taber.

Format:

Book

Author/Creator:

Heckman, James J.

Contributor:

National Bureau of Economic Research.

Lochner, Lance.

Taber, Christopher.

Series:

Working Paper Series (National Bureau of Economic Research) no. w6426.

NBER working paper series no. w6426

Language:

English

Subjects (All):

College attendance.

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

General Equilibrium Treatment Effects

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 1998.

Cambridge, Mass. : National Bureau of Economic Research, 1998.

Summary:

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.

Notes:

Print version record

February 1998.