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IDENTIFICATION OF PAIRED NONSEPARABLE MEASUREMENT ERROR MODELS

Published online by Cambridge University Press:  03 June 2016

Yingyao Hu*
Affiliation:
Johns Hopkins University
Yuya Sasaki*
Affiliation:
Johns Hopkins University
*
*Address correspondence to Yingyao Hu and Yuya Sasaki, Department of Economics, Johns Hopkins University, Wyman Park Building 544E, 3400 N. Charles St, Baltimore, MD 21218; e-mail: yhu@jhu.edu, sasaki@jhu.edu.
*Address correspondence to Yingyao Hu and Yuya Sasaki, Department of Economics, Johns Hopkins University, Wyman Park Building 544E, 3400 N. Charles St, Baltimore, MD 21218; e-mail: yhu@jhu.edu, sasaki@jhu.edu.

Abstract

This paper studies the paired nonseparable measurement error models, where two measurements, X and Y, are produced by mutually independent unobservables, U, V, and W, through the system, X = g(U,V) and Y = h(U,W). We propose restrictions to identify the marginal distribution of the common component U and the conditional distributions of X and Y given U. Applying this method to twin panel data, we find the following robust reporting patterns for years of education: (1) self reports are accurate only when the true years of education are 16 or 18, typically corresponding to advanced university degrees in the US education system; (2) sibling reports are accurate whenever the true years of education are 12, 14, 16, and 18, which are typical diploma years.

Type
ARTICLES
Copyright
Copyright © Cambridge University Press 2016 

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Footnotes

We received helpful comments from the co-editor, Arthur Lewbel, four anonymous referees, and seminar participants at Ohio State University, Greater New York Metropolitan Area Econometrics Colloquium 2012, AMES 2013, and ESEM 2013. We thank Peter C.B. Phillips and Elizabeth Frankfield for their useful editorial input to our paper. The usual disclaimer applies.

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