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Instrumental variables, local instrumental variables and control functions

Authors: Jean-Pierre Florens , James Heckman , Costas Meghir and Edward Vytlacil
Date: 01 September 2008
Type: Journal article, Econometrica, Vol. 76, No. 5, pp. 1191-1206


We consider the identification of the average treatment effect in models with continuous endogenous variables whose impact is heterogeneous. We derive a testable restriction that allows us to assess the degree of unobserved heterogeneity. Our analysis uses assumptions relating to the Local Instrumental Variables (LIV) approach and the control function approach.

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