Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/34157
Authors: 
Frölich, Markus
Year of Publication: 
2006
Series/Report no.: 
IZA Discussion Papers 2126
Abstract: 
This note argues that nonparametric regression not only relaxes functional form assumptions vis-a-vis parametric regression, but that it also permits endogenous control variables. To control for selection bias or to make an exclusion restriction in instrumental variables regression valid, additional control variables are often added to a regression. If any of these control variables is endogenous, OLS or 2SLS would be inconsistent and would require further instrumental variables. Nonparametric approaches are still consistent, though. A few examples are examined and it is found that the asymptotic bias of OLS can indeed be very large.
Subjects: 
endogeneity
nonparametric regression
instrumental variables
JEL: 
C13
C14
Document Type: 
Working Paper

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