Testing for a treatment effect in a heterogeneous population: a modified sign-test statistic and a leapfrog statistic

This paper proposes two non-parametric statistics that test for a treatment effect in a heterogeneous population. In the model considered, data on two examinations for both a control and a treatment group are needed to perform the test. The model allows for individual (fixed) effects that may be correlated with the choice of treatment. In addition, the model allows for an unspecified, monotonic transformation of the response variable. The techniques are illustrated by testing whether high levels of unemploymentbenefit eligibility affect the consumption patterns of unemployed American workers.