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Comparing IV With Structural Models: What Simple IV Can and Cannot Identify

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  • James J. Heckman
  • Sergio Urzua

Abstract

This paper compares the economic questions addressed by instrumental variables estimators with those addressed by structural approaches. We discuss Marschak's Maxim: estimators should be selected on the basis of their ability to answer well-posed economic problems with minimal assumptions. A key identifying assumption that allows structural methods to be more informative than IV can be tested with data and does not have to be imposed.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 14706.

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Date of creation: Feb 2009
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Handle: RePEc:nbr:nberwo:14706

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  22. Sergio Urzúa, 2008. "Racial Labor Market Gaps: The Role of Abilities and Schooling Choices," Journal of Human Resources, University of Wisconsin Press, vol. 43(4).
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  26. Stephen V. Cameron & James J. Heckman, 1998. "Life Cycle Schooling and Dynamic Selection Bias: Models and Evidence for Five Cohorts of American Males," Journal of Political Economy, University of Chicago Press, vol. 106(2), pages 262-333, April.
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  1. Rise and Fall of a Method
    by Agent Continuum in Agent Continuum on 2010-04-21 13:53:35
  2. Causality and Econometrics
    by Liam Delaney in Geary Behaviour Centre on 2009-04-28 19:19:00
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