A simple procedure for estimating the effect size in IV regressions
نویسنده
چکیده
Instrumental Variables (IV) estimates are frequently used to correct Ordinary Least Squares (OLS) estimates for simultaneity bias. This paper argues that in many instances, in particular when the endogenous variable is a dummy variable, the measure derived overestimates the effect. It presents a simple method for obtaining a correct estimate and applies this method to data of voluntary health insurance schemes in Mexico and Ghana. As expected the estimated effect is smaller than under OLS.
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