The control function approach (Heckman and Robb (1985)) in a system of linear simultaneous equations provides a convenient procedure to estimate one of the functions in the system using reduced form residuals from the other functions as additional regressors. The conditions on the structural system under which this procedure can be used in nonlinear and nonparametric simultaneous equations has thus far been unknown. In this paper, we define a new property of functions called control function separability and show it provides a complete characterization of the structural systems of simultaneous equations in which the control function procedure is valid.
Authors
CPP Co-Director
Richard is Co-Director of the Centre for the Microeconomic Analysis of Public Policy (CPP) and Senior Research Fellow at IFS.
UCLA
Resource details
- DOI
- 10.3982/QE281
- Publisher
- Wiley
Suggested citation
Blundell, R and Matzkin, R. (2014). Control functions in nonseparable simultaneous equations models. London: Wiley.
More from IFS
Understand this issue
Where next for the state pension?
13 December 2023
Social mobility and wealth
12 December 2023
Autumn Statement 2023: IFS analysis
23 November 2023
Policy analysis
Recent trends in public sector pay
26 March 2024
Living standards since the last election
21 March 2024
Major challenges for education in Wales
21 March 2024
Academic research
Social skills and the individual wage growth of less educated workers
27 March 2024
House price rises and borrowing to invest
27 March 2024
Household responses to trade shocks
26 March 2024