Journal Article

Comparing IV with structural models: what simple IV can and cannot identify


James Heckman, Sergio Urzua

Published Date

31 May 2010


Journal Article

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.

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