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Title:How much should we trust linear instrumental variables estimators? An application to family size and children's education PDF Logo
Authors:Mogstad, Magne
Wiswall, Matthew
Issue Date:2009
Series/Report no.:IZA Discussion Papers 4562
Abstract:Many empirical studies specify outcomes as a linear function of endogenous regressors when conducting instrumental variable (IV) estimation. We show that tests for treatment effects, selection bias, and treatment effect heterogeneity are biased if the true relationship is non-linear. These results motivate a re-examination of recent evidence suggesting no causal effect of family size on children's education. Following common practice, a linear IV estimator has been used, assuming constant marginal effects of additional children across family sizes. We find that the conclusion of no effect of family size is an artifact of the linear specification, which masks substantial marginal family size effects.
Subjects:Instrumental variables
variable treatment intensity
treatment effect heterogeneity
selection bias
quantity-quality
family size
child outcome
JEL:C31
C14
J13
Document Type:Working Paper
Appears in Collections:IZA Discussion Papers, Forschungsinstitut zur Zukunft der Arbeit (IZA)

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