On the Identifying Content of Instrument Monotonicity

Abstract: This paper studies the identifying content of the instrument monotonicity assumption of Imbens and Angrist (1994) on the distribution of potential outcomes in a model with a binary outcome, a binary treatment and an exogenous binary instrument. Specifically, I derive necessary and sufficient conditions on the distribution of the data under which the identified set for the distribution of potential outcomes when the instrument monotonicity assumption is imposed can be a strict subset of that when it is not imposed.