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Consider the problem of estimation of the effect of number of children on womenís labor supply....

Consider the problem of estimation of the effect of number of children on womenís labor supply. As we did in class, restrict attention to the subpopulation of women who had at least two children, and consider variables X ="the woman had more than two children" and Z ="the sex of her Örst two children was the same". Explain why Z is a good (valid) instrument for the endogenous variable X.

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Answer #1

why Z is a good (valid) instrument for the endogenous variable X.

IF first two children was same then there are high chance of getting the third children as Women want other sex children too.

Also, if women have both girls they want to have a boy .

On the other hand if they have one boy and one girl..very less chnace they want another chid.


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