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Monotone Instrumental Variables: With an Application to the Returns to Schooling

  • Charles F. Manski
  • John V. Pepper


Econometric analyses of treatment response commonly use instrumental variable (IV) assumptions to identify treatment effects. Yet the credibility of IV assumptions is often a matter of considerable disagreement. There is therefore good reason to consider weaker but more credible assumptions. To this end, we introduce monotone instrumental variable (MIV) assumptions and the important special case of monotone treatment selection (MTS). We study the identifying power of MIV assumptions alone and combined with the assumption of monotone treatment response (MTR). We present an empirical application using the MTS and MTR assumptions to place upper bounds on the returns to schooling.

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Paper provided by University of Virginia, Department of Economics in its series Virginia Economics Online Papers with number 308.

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Length: 26 pages
Date of creation: Jan 1998
Date of revision:
Handle: RePEc:vir:virpap:308
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  1. Charles F. Manski, 1997. "Monotone Treatment Response," Econometrica, Econometric Society, vol. 65(6), pages 1311-1334, November.
  2. Garen, John, 1984. "The Returns to Schooling: A Selectivity Bias Approach with a Continuous Choice Variable," Econometrica, Econometric Society, vol. 52(5), pages 1199-1218, September.
  3. Alan Krueger & Orley Ashenfelter, 1992. "Estimates of the Economic Return to Schooling from a New Sample of Twins," NBER Working Papers 4143, National Bureau of Economic Research, Inc.
  4. Blakemore, Arthur E. & Low, Stuart A., 1984. "The high-school dropout decision and its wage consequences," Economics of Education Review, Elsevier, vol. 3(2), pages 111-119, April.
  5. McKinley L. Blackburn & David Neumark, 1993. "Are OLS Estimates of the Return to Schooling Biased Downward? Another Look," NBER Working Papers 4259, National Bureau of Economic Research, Inc.
  6. David Card, 1994. "Earnings, Schooling, and Ability Revisited," NBER Working Papers 4832, National Bureau of Economic Research, Inc.
  7. Heckman, James J. & Robb, Richard Jr., 1985. "Alternative methods for evaluating the impact of interventions : An overview," Journal of Econometrics, Elsevier, vol. 30(1-2), pages 239-267.
  8. Manski, C.F., 1989. "Nonparametric Bounds On Treatment Effects," Working papers 8909, Wisconsin Madison - Social Systems.
  9. Manski, C.F., 1990. "The Selection Problem," Working papers 90-12, Wisconsin Madison - Social Systems.
  10. Charles F. Manski, 1996. "Learning about Treatment Effects from Experiments with Random Assignment of Treatments," Journal of Human Resources, University of Wisconsin Press, vol. 31(4), pages 709-733.
  11. Kenny, Lawrence W, et al, 1979. "Returns to College Education: An Investigation of Self-Selection Bias Based on the Project Talent Data," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 20(3), pages 775-89, October.
  12. Imbens, Guido W & Angrist, Joshua D, 1994. "Identification and Estimation of Local Average Treatment Effects," Econometrica, Econometric Society, vol. 62(2), pages 467-75, March.
  13. Oosterbeek, Hessel, 1990. "Education and earnings in the Netherlands: an empirical analysis," European Economic Review, Elsevier, vol. 34(7), pages 1353-1375, November.
  14. Robert J. Willis & Sherwin Rosen, 1978. "Education and Self-Selection," NBER Working Papers 0249, National Bureau of Economic Research, Inc.
  15. Bjorklund, Anders & Moffitt, Robert, 1987. "The Estimation of Wage Gains and Welfare Gains in Self-selection," The Review of Economics and Statistics, MIT Press, vol. 69(1), pages 42-49, February.
  16. John V. Pepper, 2000. "The Intergenerational Transmission Of Welfare Receipt: A Nonparametric Bounds Analysis," The Review of Economics and Statistics, MIT Press, vol. 82(3), pages 472-488, August.
  17. McKinley L. Blackburn & David Neumark, 1991. "Omitted-Ability Bias and the Increase in the Return to Schooling," NBER Working Papers 3693, National Bureau of Economic Research, Inc.
  18. Lang, Kevin & Ruud, Paul A, 1986. "Returns to Schooling, Implicit Discount Rates and Black-White Wage Differentials," The Review of Economics and Statistics, MIT Press, vol. 68(1), pages 41-47, February.
  19. James J. Heckman & Edward J. Vytlacil, 2000. "Local Instrumental Variables," NBER Technical Working Papers 0252, National Bureau of Economic Research, Inc.
  20. repec:oup:qjecon:v:106:y:1991:i:4:p:979-1014 is not listed on IDEAS
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