Unobserved Heterogeneity or Measurement Errors? Testing for Correlated Effects With Measurement Errors

14 Pages Posted: 20 Nov 2007

See all articles by Eleonora Patacchini

Eleonora Patacchini

Einaudi Institute for Economics and Finance (EIEF) ; IZA Institute of Labor Economics

Date Written: 0000

Abstract

This paper addresses the problem of endogenous regressors due to the presence of unobserved heterogeneity, when this is correlated with the regressors, and caused by regressors measurement errors. A simple two-stage testing procedure is proposed for the identification of the underlying cause of correlation between regressors and the error term. The statistical performance of the resulting sequential test is assessed using simulated data.

Suggested Citation

Patacchini, Eleonora, Unobserved Heterogeneity or Measurement Errors? Testing for Correlated Effects With Measurement Errors (0000). Oxford Bulletin of Economics and Statistics, Vol. 69, Issue 6, pp. 867-880, December 2007, Available at SSRN: https://ssrn.com/abstract=1031264 or http://dx.doi.org/10.1111/j.1468-0084.2007.00485.x

Eleonora Patacchini (Contact Author)

Einaudi Institute for Economics and Finance (EIEF) ( email )

Via Due Macelli, 73
Rome, 00187
Italy

IZA Institute of Labor Economics ( email )

P.O. Box 7240
Bonn, D-53072
Germany

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