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| Title: | | Estimating distributions of potential outcomes using local instrumental variables with an application to changes in college enrollment and wage inequality  |
| Authors: | | Carneiro, Pedro Lee, Sokbae |
| Issue Date: | | 2009 |
| Series/Report no.: | | cemmap working paper CWP01/09 |
| Abstract: | | This paper extends the method of local instrumental variables developed by Heckman and Vytlacil (1999, 2001, 2005) to the estimation of not only means, but also distributions of potential outcomes. The newly developed method is illustrated by applying it to changes in college enrollment and wage inequality using data from the National Longitudinal Survey of Youth of 1979. Increases in college enrollment cause changes in the distribution of ability among college and high school graduates. This paper estimates a semiparametric selection model of schooling and wages to show that, for fixed skill prices, a 14% increase in college participation (analogous to the increase observed in the 1980s), reduces the college premium by 12% and increases the 90-10 percentile ratio among college graduates by 2%. |
| Subjects: | | comparative advantage composition effects local instrumental variables marginal treatment effect semiparametric estimation wage inequality |
| JEL: | | C14 C31 J31 |
| Persistent Identifier of the first edition: | | doi:10.1920/wp.cem.2009.0109 |
| Document Type: | | Working Paper |
| Appears in Collections: | | cemmap working papers, Centre for Microdata Methods and Practice, Institute for Fiscal Studies (IFS)
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