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Estimating and Interpreting Models with Endogenous Treatment Effects

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  • Vella, Francis
  • Verbeek, Marno

Abstract

This article examines the relationship between two alternative approaches, instrumental variables and control function procedures, for estimating the impact of endogenous treatment effects. Although it is well known that the two approaches generate comparable estimates, the relationship between the estimators and their accompanying endogeneity tests appears not to be well understood. We show that the two procedures are closely related. We also examine the implications of the two procedures for the underlying economic sorting behavior.

Suggested Citation

  • Vella, Francis & Verbeek, Marno, 1999. "Estimating and Interpreting Models with Endogenous Treatment Effects," Journal of Business & Economic Statistics, American Statistical Association, vol. 17(4), pages 473-478, October.
    • Handle: RePEc:bes:jnlbes:v:17:y:1999:i:4:p:473-78
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