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Alternative Approaches to Evaluation in Empirical Microeconomics

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  • Richard Blundell
  • Monica Costa Dias

Abstract

This paper reviews some of the most popular policy evaluation methods in empirical microeconomics: social experiments, natural experiments, matching, instrumental variables, discontinuity design, and control functions. It discusses identification of traditionally used average parameters and more complex distributional parameters. The adequacy, assumptions, and data requirements of each approach are discussed, drawing on empirical evidence from the education and employment policy evaluation literature. A workhorse simulation model of education and earnings is used throughout the paper to discuss and illustrate each approach. The full set of STATA data sets and do-files are available free online and can be used to reproduce all estimation results.

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  • Richard Blundell & Monica Costa Dias, 2009. "Alternative Approaches to Evaluation in Empirical Microeconomics," Journal of Human Resources, University of Wisconsin Press, vol. 44(3).
    • Handle: RePEc:uwp:jhriss:v:44:y:2009:i3:p565-640
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    JEL classification:

    • C52 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Evaluation, Validation, and Selection
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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