Using Matching, Instrumental Variables, and Control Functions to Estimate Economic Choice Models
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- 1 February 2004
- journal article
- Published by MIT Press in The Review of Economics and Statistics
- Vol. 86 (1) , 30-57
- https://doi.org/10.1162/003465304323023660
Abstract
This paper investigates four topics. (1) It examines the different roles played by the propensity score (the probability of selection into treatment) in matching, instrumental variable, and control function 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 in a sense defined in this paper. © 2004 President and Fellows of Harvard College and the Massachusetts Institute of Technology.Keywords
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