In the instrumental variable approach adopted, randomisation is the instrument, with the assumption that the effect of randomisation on the outcome only operates through its effect on treatment.
But whatever the claims of empire, the instrumental variable now enjoys an almost imperial grip on the imagination of economists.
The instrumental variable in this instance allows a clear, credible estimate of the return from extra schooling for those most inclined to drop out from school early.
However, in many cases, the instrumental variable assumptions are not plausible, or are in doubt.
Information on address was used to compute the travel time variables for the instrumental variable estimation.
Notwithstanding, we will check as a robustness test the instrumental variable solution.
Therefore, the instrumental variable Z affects Y only through its effect on X.
There are, however, objections against the validity and the relevance of the instrumental variable.
The instrumental variable technique additionally tests for endogeneity of the dependent variable.
The ordinary least squares and the instrumental variable techniques were used in analysing the data.
This is typically done within the instrumental variable (IV) regression framework (c.f. Angrist & Krueger, 1991, 2001).
