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IZA
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Using Matching, Instrumental Variables and Control Functions to Estimate Economic Choice Models
by
James J. Heckman, Salvador Navarro
(April 2003)
published in: Review of Economics and Statistics, 2004, 86(1), 30-57
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.
Text: See Discussion Paper No. 768
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