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

33 Pages Posted: 17 Feb 2009 Last revised: 8 Sep 2010

See all articles by James J. Heckman

James J. Heckman

University of Chicago - Department of Economics; National Bureau of Economic Research (NBER); American Bar Foundation; Institute for the Study of Labor (IZA); CESifo (Center for Economic Studies and Ifo Institute)

Sergio Urzua

Northwestern University

Multiple version iconThere are 2 versions of this paper

Date Written: February 2009

Abstract

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.

Suggested Citation

Heckman, James J. and Urzua, Sergio Samuel, Comparing IV with Structural Models: What Simple IV Can and Cannot Identify (February 2009). NBER Working Paper No. w14706. Available at SSRN: https://ssrn.com/abstract=1344688

James J. Heckman (Contact Author)

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Sergio Samuel Urzua

Northwestern University ( email )

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Evanston, IL 60208
United States

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