A Note on the Common Support Problem in Applied Evaluation Studies

This paper advocates the use of a nonparametric,bounds,analysis to check,the robustness of the results of applied ,evaluation studies to the problem ,of a ,lack of common ,support. The typical responses by researchers of either ignoring it, or obtaining estimates only for the subpopulation within the common support, can both be misleading: Ignoring the problem may result in biases because the comparison ,group may ,not be comparable. ,Deleting observations at best yields an estimator that is consistent for the common ,support. When treatment effects are heterogeneous inside and outside the common support this estimator does is inconsistent. Furthermore, useful information is ignored, because the response of the treated to the treatment can be estimated even outside the common,support. This information can be used,to derive bounds with width depend- ing on the configuration of the data. The application to an evaluation study of Swiss active labour market policies shows that the relevance of the bounds for changing the interpretation of the re- sults depends very much,on the particular data configuration. Keywords: Bounds, matching, propensity score, treatment effects. JEL classification: C10, C50, J60, J68.