Migration plays an important role in development and as a strategy for poverty reduction. Burkina Faso, whose conditions for agriculture are far from favorable, has a long history of migratory movement, and migration within West Africa has long taken place in response to drought and low agricultural productivity.
Andrew, a famous theoretical economist, is trying to estimate the causal impact of migration on household income. He took a random sample of 500 households where a household member has migrated and another random sample of 500 households where no household member has migrated.
In his final report, he first shows that
• The average income of the 500 households where someone migrated is 35,000 CFA
• The average income of the 500 households where no one migrated is 20,000 CFA
• The average income of the 500 households where someone migrated had they not migrated is 25,000 CFA
• The average income of the 500 households where no one migrated had they migrated is 30,000 CFA
Andrew then estimates the naive Average Treatment (ATE) by subtracting the average income of the 500 households where no one migrated from the average income of the 500 households where someone migrated.
For the rest of this question, use the information provided above.
How large is the selection bias
5000
10000
15000
35000
-5000
-10000
-15000
-35000