Stata Tutorials Topic 45: Instrumental Variables Method (IV) using Stata | Regression Analysis and Estimation Methods Using Stata
Hi, I am Bob. Welcome to the Stata course on regression analysis and estimation methods. We will discuss obtaining the 2SLS estimates with instrumental variables in Stata. Please check out the video on the basics of the instrumental variables method before running the models. We will estimate the return to education for male workers. The dataset comes from the textbook Introductory Econometrics: A Modern Approach by Professor Jeffrey Wooldridge. You can download the data file from the link below.
Please download the dataset:
https://drive.google.com/file/d/1FOQkf1FTX61tjXoAZ5LI41J07E5o6MLS/view?usp=sharing
#IV #ivregress #2SLS #Stata #InstrumentalVariable #OmittedVariableBias #RegressionAnalysisandEstimationMethods #endogenous #estat
The Stata commands in this video:
*OLS
regress lwage educ exper expersq black south smsa66 reg662-reg669
estimates store OLS
*2SLS
help ivregress
*College Proximity as IV
ivregress 2sls lwage exper expersq black south smsa66 reg662-reg669 (educ=nearc4), first
display exp(.1530483)-1
estimates store IV1
esttab OLS IV1, mtitles se star(* 0.1 ** 0.05 *** 0.01) b(%7.3f)
*Parent's Education as IV
egen parenteduc=rowmean(fatheduc motheduc)
ivregress 2sls lwage exper expersq black south smsa66 reg662-reg669 (educ=parenteduc), first
estimates store IV2
esttab OLS IV1 IV2, mtitles se star(* 0.1 ** 0.05 *** 0.01) b(%7.3f)
*Use Both IVs
ivregress 2sls lwage exper expersq black south smsa66 reg662-reg669 (educ=nearc4 parenteduc), first
estimates store IV3
esttab OLS IV1 IV2 IV3, mtitles se star(* 0.1 ** 0.05 *** 0.01) b(%7.3f)
*Postestimation Tests
estat firststage
estat endogenous
estat overid
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