We draw attention to two problems associated with the use of instrumental variables (IV), the importance of which for empirical work has not been fully appreciated. First, the use of instruments that explain little of the variation in the endogenous explanatory variables can lead to large inconsistencies in the IV estimates even if only a weak relationship exists between the instruments and the error in the structural equation. Second, in finite samples, IV estimates are biased in the same direction as ordinary least squares (OLS) estimates. The magnitude of the bias of IV estimates approaches that of OLS estimates as the R 2 between the instruments and the endogenous explanatory variable approaches 0. To illustrate these problems, we reexamine the results of a recent paper by Angrist and Krueger, who used large samples from the U.S. Census to estimate wage equations in which quarter of birth is used as an instrument for educational attainment. We find evidence that, despite huge sample sizes, th...

https://www.jstor.org/stable/pdfplus/2291055.pdf

Problems with Instrumental Variables Estimation when the Correlation between the Instruments and the Endogenous Explanatory Variable is Weak

Among countries colonized by European powers during the past 500 years, those that were relatively rich in 1500 are now relatively poor. We document this reversal using data on urbanization patterns and population density, which, we argue, proxy for economic prosperity. This reversal weighs against a view that links economic development to geographic factors. Instead, we argue that the reversal ree ects changes in the institutions resulting from European colonialism. The European intervention appears to have created an “ institutional reversal” among these societies, meaning that Europeans were more likely to introduce institutions encouraging investment in regions that were previously poor. This institutional reversal accounts for the reversal in relative incomes. We provide further support for this view by documenting that the reversal in relative incomes took place during the late eighteenth and early nineteenth centuries, and resulted from societies with good institutions taking advantage of the opportunity to industrialize.

/pdf/reversal-of-fortune-geography-and-institutions-in-the-making-3p9wy5nyeq.pdf

Reversal of fortune: geography and institutions in the making of the modern world income distribution*

We establish that season of birth is related to educational attainment because of school start age policy and compulsory school attendance laws. Individuals born in the beginning of the year start school at an older age, and can therefore drop out after completing less schooling than individuals born near the end of the year. Roughly 25 percent of potential dropouts remain in school because of compulsory schooling laws. We estimate the impact of compulsory schooling on earnings by using quarter of birth as an instrument for education. The instrumental variables estimate of the return to education is close to the ordinary least squares estimate, suggesting that there is little bias in conventional estimates. Every developed country in the world has a compulsory schooling requirement, yet little is known about the effect these laws have on educational attainment and earnings.1 This paper exploits an unusual natural experiment to estimate the impact of compulsory schooling laws in the United States. The experiment stems from the fact that children born in different months of the year start school at different ages, while compulsory schooling laws generally require students to remain in school until their sixteenth or seventeenth birthday. In effect, the interaction of school-entry requirements and compulsory schooling laws compel students born

/pdf/does-compulsory-school-attendance-affect-schooling-and-3nyowim37w.pdf

Does Compulsory School Attendance Affect Schooling and Earnings

Ecological studies of terrestrial urban systems have been approached along several kinds of contrasts: ecology in as opposed to ecology of cities; biogeochemical compared to organismal perspectives, land use planning versus biological, and disciplinary versus interdisciplinary. In order to point out how urban ecological studies are poised for significant integration, we review key aspects of these disparate literatures. We emphasize an open definition of urban systems that accounts for the exchanges of material and influence between cities and surrounding landscapes. Research on ecology in urban systems highlights the nature of the physical environment, including urban climate, hydrology, and soils. Biotic research has studied flora, fauna, and vegetation, including trophic effects of wildlife and pets. Unexpected interactions among soil chemistry, leaf litter quality, and exotic invertebrates exemplify the novel kinds of interactions that can occur in urban systems. Vegetation and faunal responses suggest that the configuration of spatial heterogeneity is especially important in urban systems. This insight parallels the concern in the literature on the ecological dimensions of land use planning. The contrasting approach of ecology of cities has used a strategy of biogeochemical budgets, ecological footprints, and summaries of citywide species richness. Contemporary ecosystem approaches have begun to integrate organismal, nutrient, and energetic approaches, and to show the need for understanding the social dimensions of urban ecology. Social structure and the social allocation of natural and institutional resources are subjects that are well understood within social sciences, and that can be readily accommodated in ecosystem models of metropolitan areas. Likewise, the sophisticated understanding of spatial dimensions of social differentiation has parallels with concepts and data on patch dynamics in ecology and sets the stage for comprehensive understanding of urban ecosystems. The linkages are captured in the human ecosystem framework.

/pdf/urban-ecological-systems-linking-terrestrial-ecological-2kwkdbwzer.pdf

Ellsworth Huntington

Papers

Civilization and Climate

Season of birth.

Civilization and Climate

Season of birth : its relation to human abilities

Mainsprings of Civilization.