In the potential outcomes framework, suppose that program eligibility is randomly assigned but participation cannot be enforced.

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In the potential outcomes framework, suppose that program eligibility is randomly assigned but participation cannot be enforced. To formally describe this situation, for each person i, zi is the eligibility indicator and xi is the participation indicator. Randomized eligibility means zi is independent of [yi(0), yi(1)] but xi might not satisfy the independence assumption.

(i) Explain why the difference in means estimator is generally no longer unbiased.

(ii) In the context of a job training program, what kind of individual behavior would cause bias?

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