Instrumental Variables Method (IV) using Stata | Estimation Methods | Stata Tutorials Topic 45

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/1FOQk...

#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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