NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Overidentification Tests with Grouped Data

Caroline Hoxby, M. Daniele Paserman

NBER Technical Working Paper No. 223*
Issued in February 1998

This paper examines the validity of overidentification tests and exogeneity tests in the presence of grouped data. We find that even a small intra-group correlation, when instruments do not vary within groups, may generate a substantial bias in the standard overidentification tests described in textbooks.

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