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

46 Pages Posted: 18 Feb 2003

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)

Salvador Navarro-Lozano

University of Chicago - Department of Economics

Multiple version iconThere are 2 versions of this paper

Date Written: February 2003

Abstract

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.

Suggested Citation

Heckman, James J. and Navarro-Lozano, Salvador, Using Matching, Instrumental Variables and Control Functions to Estimate Economic Choice Models (February 2003). NBER Working Paper No. w9497. Available at SSRN: https://ssrn.com/abstract=380121

James J. Heckman (Contact Author)

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Salvador Navarro-Lozano

University of Chicago - Department of Economics ( email )

1126 East 59th Street
Chicago, IL 60637
United States

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