Using Matching, Instrumental Variables and Control Functions to Estimate Economic Choice Models

James J. Heckman, Salvador Navarro-Lozano

NBER Working Paper No. 9497
Issued in February 2003
NBER Program(s):   CH   ED   LS   PE

This paper investigates four topics. (1) It examines the different roles played by the propensity score (probability of selection) in matching, instrumental variable and control functions methods. (2) It contrasts the roles of exclusion restrictions in matching and selection models. (3) It characterizes the sensitivity of matching to the choice of conditioning variables and demonstrates the greater robustness of control function methods to misspecification of the conditioning variables. (4) It demonstrates the problem of choosing the conditioning variables in matching and the failure of conventional model selection criteria when candidate conditioning variables are not exogenous.

(814 K)

Published: James Heckman & Salvador Navarro-Lozano, 2004. "Using Matching, Instrumental Variables, and Control Functions to Estimate Economic Choice Models," The Review of Economics and Statistics, MIT Press, vol. 86(1), pages 30-57, 08.

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