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Iowa State University

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2018

Economics Working Papers

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Bounding Average Returns To Schooling Using Unconditional Moment Restrictions, Desire Kedagni, Lixiong Li, Ismael Mourifie Dec 2018

Bounding Average Returns To Schooling Using Unconditional Moment Restrictions, Desire Kedagni, Lixiong Li, Ismael Mourifie

Economics Working Papers

Abstract. In the last 20 years, the bounding approach for the average treatment effect (ATE) has been developing on the theoretical side, however, empirical work has lagged far behind theory in this area. One main reason is that, in practice, traditional bounding methods fall into two extreme cases: (i) On the one hand, the bounds are too wide to be informative and this happens, in general, when the instrumental variable (IV) has little variation; (ii) while on the other hand, the bounds cross, in which case the researcher learns nothing about the parameter of interest other than that the IV ...