ivcrc: An instrumental-variables estimator for the correlated random-coefficients model

We discuss the ivcrc command, which implements an instrumental-variables (IV) estimator for the linear correlated random-coefficients model. The correlated random-coefficients model is a natural generalization of the standard linear IV model that allows for endogenous, multivalued treatments and unobserved heterogeneity in treatment effects. The estimator implemented by ivcrc uses recent semiparametric identification results that allow for flexible functional forms and permit instruments that may be binary, discrete, or continuous. The ivcrc command also allows for the estimation of varying-coefficient regressions, which are closely related in structure to the proposed IV estimator. We illustrate the use of ivcrc by estimating the returns to education in the National Longitudinal Survey of Young Men.

Duke Scholars

Author Matthew A Masten Economics