Sensitivity checks for the local average treatment effect

The nonparametric identification of the local average treatment effect (LATE) hinges on the satisfaction of three instrumental variable assumptions: (1) Unconfounded assignment of the instrument, (2) no average direct effect of the instrument on the outcome within compliance types (exclusion restric- tion), and (3) weak monotonicity of the treatment in the instrument. While (1) often appears plausible in experiments when using randomization as instrument for actual participation, (2) and (3) may be con- troversial. For this reason, this paper proposes easily implementable sensitivity checks to assess the ro- bustness of the LATE to deviations from either the exclusion restriction or monotonicity. An empirical illustration based on female labor supply data is also provided