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Alternative approaches to evaluation in empirical microeconomics

  • Richard Blundell

    ()

    (Institute for Fiscal Studies and IFS and UCL)

  • Monica Costa Dias

    ()

    (Institute for Fiscal Studies and Institute for Fiscal Studies)

This paper reviews a range of the most popular policy evaluation methods in empirical microeconomics: social experiments, natural experiments, matching methods, instrumental variables, discontinuity design and control functions. It discusses the identification of both the traditionally used average parameters and more complex distributional parameters. In each case, the necessary assumptions and the data requirements are considered. The adequacy of each approach is discussed drawing on the empirical evidence from the education and labor market policy evaluation literature. We also develop an education evaluation model which we use to carry through the discussion of each alternative approach. A full set of STATA datasets are provided free online which contain Monte-Carlo replications of the various specifications of the education evaluation model. There are also a full set of STATA .do files for each of the estimation approaches described in the paper. The .do-files can be used together with the datasets to reproduce all the results in the paper.

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File URL: http://cemmap.ifs.org.uk/wps/cwp2608.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 CWP26/08.

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Date of creation: 14 Oct 2008
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Handle: RePEc:ifs:cemmap:26/08
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