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Title:On the sensitivity of return to schooling estimates to estimation methods, model specification, and influential outliers if identification is weak PDF Logo
Authors:Jaeger, David A.
Parys, Juliane
Issue Date:2009
Series/Report no.:IZA discussion papers 3961
Abstract:We provide a comparison of return to schooling estimates based on an influential study by Angrist and Krueger (1991) using two stage least squares (TSLS), limited information maximum likelihood (LIML), jackknife (JIVE), and split sample instrumental variables (SSIV) estimation. We find that the estimated return to education is quite sensitive to the age controls used in the models as well as the estimation method used. In particular, we provide evidence that JIVE coefficients' standard errors are inflated by a group of extreme years of education observations, for which identification is especially weak. We propose to use Cook's Distance in order to identify influential outliers having substantial influence on first-stage JIVE coefficients and fitted values.
Subjects:Cook's Distance
heteroskedasticity
outliers
return to education
specification
weak instruments
JEL:C13
C31
J31
Persistent Identifier of the first edition:urn:nbn:de:101:1-20090209313
Document Type:Working Paper
Appears in Collections:IZA Discussion Papers, Forschungsinstitut zur Zukunft der Arbeit (IZA)

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