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Semiparametric reduced form estimation of tuition subsidies

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Author Info

  • Hidehiko Ichimura

    ()
    (Institute for Fiscal Studies and University of Tokyo)

  • Christopher Taber

Abstract

The goal of this paper is to use a semiparametric reduced form model to estimate the effects of various tuition subsidies. This approach expands on the tuition subsidy example in Ichimura and Taber (2000) in a number of dimensions. It has become common practice in the empirical literature to refer to any nonstructural empirical analysis as "reduced form." This is not the traditional sense of the phrase. A classic reduced form analysis (see e.g. Marschak, 1953) first specifies a structural model and then derives the reduced form parameters in terms of the structural parameters. While many recent studies have asserted to taking a reduced form approach, the structural parameters. While many recent studies have asserted to taking a reduced form approach, the structural model which the reduced form model should correspond is rarely specified. We explicitly specify a structural model and use the implied reduced form structure to estimate the effect of tuition subsidy policies. Specifying the underlying model has the advantage of being explicit about the assumptions that justify the analysis. This avoids Rosenzweig and Wolpin's (2000) criticism of work on natural 'natural experiments' that often leaves these conditions implicit. Our structural model is based on the model studied by Keane and Wolpin (1999). It is highly nonlinear and allows for more unobserved heterogeneity than the typical simultaneous equations framework that most previous work has used in reduced form estimation. Using hte specified structural model, we examine the assumptions discussed in Ichimura and Taber (2000) to justify reduced form estimation of the policy effects

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Bibliographic Info

Paper provided by Centre for Microdata Methods and Practice, Institute for Fiscal Studies in its series CeMMAP working papers with number CWP01/02.

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Length: 13 pp.
Date of creation: Jan 2002
Date of revision:
Handle: RePEc:ifs:cemmap:01/02

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  1. Hidehiko Ichimura & Christopher Taber, 2000. "Direct estimation of policy impacts," IFS Working Papers W00/05, Institute for Fiscal Studies.
  2. Keane, Michael P & Wolpin, Kenneth I, 2001. "The Effect of Parental Transfers and Borrowing Constraints on Educational Attainment," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 42(4), pages 1051-1103, November.
  3. Ichimura, H., 1991. "Semiparametric Least Squares (sls) and Weighted SLS Estimation of Single- Index Models," Papers 264, Minnesota - Center for Economic Research.
  4. Kenneth I. Wolpin & Mark R. Rosenzweig, 2000. "Natural "Natural Experiments" in Economics," Journal of Economic Literature, American Economic Association, vol. 38(4), pages 827-874, December.
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Cited by:
  1. Guy Laroque & Bernard Salanie, 2008. "Does Fertility Respond to Financial Incentives?," Discussion Papers 0708-15, Columbia University, Department of Economics.
  2. Mario Fiorini, 2007. "Fostering Educational Enrolment Through Subsidies: the Issue of Timing," 2007 Meeting Papers 365, Society for Economic Dynamics.
  3. Petra Todd & Kenneth I. Wolpin, 2002. "Using a Social Experiment to Validate a Dynamic Behavioral Model of Child Schooling and Fertility: Assessing the Impact of a School Subsidy Program in Mexico," PIER Working Paper Archive 03-022, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania, revised 01 Sep 2003.
  4. Ahituv, Avner & Lerman, Robert I., 2005. "Job Turnover, Wage Rates, and Marital Stability: How Are They Related?," IZA Discussion Papers 1470, Institute for the Study of Labor (IZA).
  5. Avner Ahituv & Robert Lerman, 2011. "Job turnover, wage rates, and marital stability: How are they related?," Review of Economics of the Household, Springer, vol. 9(2), pages 221-249, June.
  6. Toivanen, Otto & Väänänen, Lotta, 2011. "Education and Invention," CEPR Discussion Papers 8537, C.E.P.R. Discussion Papers.
  7. Petra E. TODD & Kenneth I. WOLPIN, 2008. "Ex Ante Evaluation of Social Programs," Annales d'Economie et de Statistique, ENSAE, issue 91-92, pages 263-291.
  8. Riphahn, Regina T., 2004. "The Enrollment Effect of Secondary School Fees in Post-War Germany," IZA Discussion Papers 1295, Institute for the Study of Labor (IZA).
  9. Rothe, Christoph, 2010. "Nonparametric estimation of distributional policy effects," Journal of Econometrics, Elsevier, vol. 155(1), pages 56-70, March.

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