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Statistical verification of a natural "natural experiment": Tests and sensitivity checks for the sibling sex ratio instrument

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  • Huber, Martin

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Abstract

This paper presents statistical evidence about the validity of the sibling sex ratio instrument proposed by Angrist and Evans (1998), a prominent natural “natural experiment” in the sense of Rosenzweig and Wolpin (2000). The sex ratio of the first two siblings is arguably randomly assigned and influences the probability of having a third child, which makes it a candidate instrument for fertility when estimating the effect of fertility on female labor supply. However, identification hinges on the satisfaction of the instrumental exclusion restriction and the monotonicity of fertility in the instrument, see Imbens and Angrist (1994). Using the methods of Kitagawa (2008), Huber and Mellace (2011a), and Huber and Mellace (2012), we for the first time verify the validity of the sibling sex ratio instrument by statistical hypothesis tests, which suggest that violations are small if not close to nonexistent. We also provide novel sensitivity checks to assess deviations from the exclusion restriction and/or monotonicity in the nonparametric local average treatment effect framework and find the negative labor supply effect of fertility to be robust to a plausible range of violations.

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File URL: http://www1.vwa.unisg.ch/RePEc/usg/econwp/EWP-1219.pdf
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Bibliographic Info

Paper provided by University of St. Gallen, School of Economics and Political Science in its series Economics Working Paper Series with number 1219.

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Length: 43 pages
Date of creation: Aug 2012
Date of revision:
Handle: RePEc:usg:econwp:2012:19

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Keywords: instrumental variable; treatment effects; LATE; tests; sensitivity analysis.;

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References

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  1. Aart Kraay, 2012. "Instrumental variables regressions with uncertain exclusion restrictions: a Bayesian approach," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 27(1), pages 108-128, 01.
  2. Angrist, Joshua D, 1990. "Lifetime Earnings and the Vietnam Era Draft Lottery: Evidence from Social Security Administrative Records," American Economic Review, American Economic Association, vol. 80(3), pages 313-36, June.
  3. Lee, Jungmin, 2004. "Sibling Size and Investment in Children's Education: An Asian Instrument," IZA Discussion Papers 1323, Institute for the Study of Labor (IZA).
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  17. Martin Huber & Giovanni Mellace, 2010. "Sharp IV bounds on average treatment effects under endogeneity and noncompliance," University of St. Gallen Department of Economics working paper series 2010 2010-31, Department of Economics, University of St. Gallen.
  18. Hansen, Peter Reinhard, 2005. "A Test for Superior Predictive Ability," Journal of Business & Economic Statistics, American Statistical Association, vol. 23, pages 365-380, October.
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  24. Donald, Stephen G. & Hsu, Yu-Chin, 2011. "A new test for linear inequality constraints when the variance–covariance matrix depends on the unknown parameters," Economics Letters, Elsevier, vol. 113(3), pages 241-243.
  25. Steven D. Levitt, 1995. "Using Electoral Cycles in Police Hiring to Estimate the Effect of Policeon Crime," NBER Working Papers 4991, National Bureau of Economic Research, Inc.
  26. Ben-Porath, Yoram & Welch, Finis, 1976. "Do Sex Preferences Really Matter?," The Quarterly Journal of Economics, MIT Press, vol. 90(2), pages 285-307, May.
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Citations

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Cited by:
  1. Angelov, Nikolay & Karimi, Arizo, 2012. "Mothers’ Income Recovery after Childbearing," Working Paper Series, Center for Labor Studies 2012:19, Uppsala University, Department of Economics.
  2. de Chaisemartin, Clement, 2013. "Defying the LATE? Identification of local treatment effects when the instrument violates monotonicity," The Warwick Economics Research Paper Series (TWERPS) 1020, University of Warwick, Department of Economics.

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