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

Author

Listed:
  • Sergio Urzua

    (Northwestern University)

  • James J. Heckman

    (University of Chicago & University College Dublin)

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

  • Sergio Urzua & James J. Heckman, 2009. "Comparing IV with Structural Models: What Simple IV Can and Cannot Identify," Working Papers 200906, Geary Institute, University College Dublin.
    • Handle: RePEc:ucd:wpaper:200906
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    References listed on IDEAS

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    More about this item

    Keywords

    Instrumental Variables; Structural Approaches; Marschak's Maxim;
    All these keywords.

    JEL classification:

    • C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models

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    This paper has been announced in the following NEP Reports:

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