Overidentification Tests with Grouped Data
Caroline M. Hoxby
Stanford University; National Bureau of Economic Research (NBER); Hoover Institution; Stanford University
M. Daniele Paserman
Hebrew University of Jerusalem - Department of Economics; Centre for Economic Policy Research (CEPR); Institute for the Study of Labor (IZA)
NBER Working Paper No. t0223
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.
Number of Pages in PDF File: 27working papers series
Date posted: July 19, 2000
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