Comparing IV With Structural Models: What Simple IV Can and Cannot Identify

James J. Heckman, Sergio Urzua

NBER Working Paper No. 14706
Issued in February 2009
NBER Program(s):   TWP

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.

(407 K)

Published: Heckman, James J. & Urzúa, Sergio, 2010. "Comparing IV with structural models: What simple IV can and cannot identify," Journal of Econometrics, Elsevier, vol. 156(1), pages 27-37, May.

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Acknowledgments

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