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dc.contributor.authorBelzil, Christianen_US
dc.contributor.authorHansen, Jörgenen_US
dc.date.accessioned2008-07-24en_US
dc.date.accessioned2010-07-07T11:31:12Z-
dc.date.available2010-07-07T11:31:12Z-
dc.date.issued2008en_US
dc.identifier.piurn:nbn:de:101:1-2008060999en_US
dc.identifier.urihttp://hdl.handle.net/10419/34977-
dc.description.abstractWe consider an artificial population of forward looking heterogeneous agents making decisions between schooling, employment, employment with training and household production, according to a behavioral model calibrated to a large set of stylized facts. Some of these agents are subject to policy interventions (a higher education subsidy) that vary according to their generosity. We evaluate the capacity of Instrumental Variable (IV) methods to recover the population Local Average Treatment Effect (LATE) and analyze the economic implications of using a strong instrument within a dynamic economic model. We also examine the performances of two sampling designs that may be used to improve classical linear IV; a Regression-Discontinuity (RD) design and an age-based sampling design targeting early career wages. Finally, we investigate the capacity of IV to estimate alternative causal parameters. The failure of classical linear IV is spectacular. IV fails to recover the true LATE, even in the static version of the model. In some cases, the estimates lie outside the support of the population distribution of returns to schooling and are nearly twice as large as the population LATE. The trade-off between the statistical power of the instrument and dynamic self-selection caused by the policy shock implies that access to a strong instrument is not necessarily desirable. There appears to be no obvious realistic sampling design that can guarantee IV accuracy. Finally, IV also fails to estimate the reduced-form marginal effect of schooling on wages of those affected by the experiment. Within a dynamic setting, IV is deprived of any causal substance.en_US
dc.language.isoengen_US
dc.publisherIZA Bonnen_US
dc.relation.ispartofseriesIZA Discussion Papers 3528en_US
dc.subject.jelB4en_US
dc.subject.ddc330en_US
dc.subject.keywordDynamic discrete choiceen_US
dc.subject.keyworddynamic programmingen_US
dc.subject.keywordtreatment effectsen_US
dc.subject.keywordweak instrumentsen_US
dc.subject.keywordinstrumental variableen_US
dc.subject.keywordreturns to schoolingen_US
dc.subject.stwInstrumentalvariablen-Schätzmethodeen_US
dc.subject.stwKritiken_US
dc.subject.stwBildungsertragen_US
dc.subject.stwBildungspolitiken_US
dc.subject.stwWirkungsanalyseen_US
dc.subject.stwBildungsverhaltenen_US
dc.subject.stwArbeitsangeboten_US
dc.subject.stwHaushaltsproduktionen_US
dc.subject.stwDiskrete Entscheidungen_US
dc.subject.stwTesten_US
dc.subject.stwTheorieen_US
dc.titleCalibration and IV estimation of a wage outcome equation in a dynamic environmenten_US
dc.typeWorking Paperen_US
dc.identifier.ppn571194281en_US
dc.rightshttp://www.econstor.eu/dspace/Nutzungsbedingungen-
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