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Comparing IV with structural models: what simple IV can and cannot identify

Listed author(s):
  • James Heckman

    ()

    (Institute for Fiscal Studies and University of Chicago)

  • Sergio Urzua

    (Institute for Fiscal Studies)

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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File URL: http://cemmap.ifs.org.uk/wps/cwp0810.pdf
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Paper provided by Centre for Microdata Methods and Practice, Institute for Fiscal Studies in its series CeMMAP working papers with number CWP08/10.

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Date of creation: 24 Apr 2010
Handle: RePEc:ifs:cemmap:08/10
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