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Title: Understanding Instrumental Variables in Models with Essential Heterogeneity
Resulting in 1 citation.
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Heckman, James J. Vytlacil, Edward Urzua, Sergio |
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Understanding Instrumental Variables in Models with Essential Heterogeneity IZA Discussion Paper No. 2320, Institute for the Study of Labor (IZA), September 2006. Also: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=936692 Cohort(s): NLSY79 Publisher: Institute for the Study of Labor (IZA) Keyword(s): Heterogeneity; High School Completion/Graduates; Variables, Instrumental; Wages Permission to reprint the abstract has not been received from the publisher. This paper examines the properties of instrumental variables (IV) applied to models with essential heterogeneity, that is, models where responses to interventions are heterogeneous and agents adopt treatments (participate in programs) with at least partial knowledge of their idiosyncratic response. We analyze two-outcome and multiple-outcome models including ordered and unordered choice models. We allow for transition-specific and general instruments. We generalize previous analyses by developing weights for treatment effects for general instruments. We develop a simple test for the presence of essential heterogeneity. We note the asymmetry of the model of essential heterogeneity: outcomes of choices are heterogeneous in a general way; choices are not. When both choices and outcomes are permitted to be symmetrically heterogeneous, the method of IV breaks down for estimating treatment parameters. |
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Bibliography Citation
Heckman, James J., Edward Vytlacil and Sergio Urzua. "Understanding Instrumental Variables in Models with Essential Heterogeneity." IZA Discussion Paper No. 2320, Institute for the Study of Labor (IZA), September 2006. |