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Using Matching, Instrumental Variables and Control Functions to Estimate Economic Choice Models

Author

Listed:
  • Heckman, James J.

    (University of Chicago)

  • Navarro, Salvador

    (University of Wisconsin-Madison)

Abstract

This paper investigates four topics. (1) It examines the different roles played by the propensity score (probability of selection) in matching, instrumental variable and control functions methods. (2) It contrasts the roles of exclusion restrictions in matching and selection models. (3) It characterizes the sensitivity of matching to the choice of conditioning variables and demonstrates the greater robustness of control function methods to misspecification of the conditioning variables. (4) It demonstrates the problem of choosing the conditioning variables in matching and the failure of conventional model selection criteria when candidate conditioning variables are not exogenous.

Suggested Citation

  • Heckman, James J. & Navarro, Salvador, 2003. "Using Matching, Instrumental Variables and Control Functions to Estimate Economic Choice Models," IZA Discussion Papers 768, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp768
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    References listed on IDEAS

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    More about this item

    Keywords

    identification; discrete choice; instrumental variables; control functions; matching;
    All these keywords.

    JEL classification:

    • C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models

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