The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd

Control Functions

  • Salvador Navarro
Reference work entry
DOI: https://doi.org/10.1057/978-1-349-95189-5_2262

Abstract

The control function approach is an econometric method used to correct for biases that arise as a consequence of selection and/or endogeneity. It is the leading approach for dealing with selection bias in the correlated random coefficients model. The basic idea of the method is to model the dependence between the variables not observed by the analyst on the observables in a way that allows us to construct a function K such that, conditional on the function, the endogeneity problem (relative to the object of interest) disappears.

Keywords

Average treatment effect Control functions Endogeneity Identification Instrumental variables Roy model Selection bias 
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Copyright information

© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  • Salvador Navarro
    • 1
  1. 1.