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dc.contributor.authorBelzil, Christianen_US
dc.contributor.authorHansen, Jörgenen_US
dc.description.abstractWe build on Rosenzweig and Wolpin (2000) and Keane (2010) and show that in order to fulfill the Instrumental variable (IV) identifying moment condition, a policy must be designed so that compliers and non-compliers either have the same average error term, or have an error term ratio equal to their relative share of the population. The former condition (labeled Choice Orthogonality) is essentially a no-selection condition. The latter one, referred to as Weighted Opposite Choices, may be viewed as a distributional (functional form) assumption necessary to match the degree of selectivity between compliers and noncompliers to their relative population proportions. Those conditions form a core of implicit IV assumptions that are present in any empirical applications. They allow the econometrician to gain substantial insight about the validity of a specific instrument, and they illustrate the link between identification and the statistical strength of an instrument. Finally, our characterization may also help designing a policy generating a valid instrument.en_US
dc.publisherInstitute for the Study of Labor (IZA) Bonnen_US
dc.relation.ispartofseriesDiscussion Paper series, Forschungsinstitut zur Zukunft der Arbeit 6339en_US
dc.subject.keywordinstrumental variable methodsen_US
dc.subject.keywordimplicit assumptionsen_US
dc.subject.keywordtreatment effectsen_US
dc.titleCharacterizing the instrumental variable identifying assumption as sample selection conditionsen_US
dc.typeWorking Paperen_US
Appears in Collections:IZA Discussion Papers, Forschungsinstitut zur Zukunft der Arbeit (IZA)

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