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Re: st: OLS and IV have opposite sign


From   Shikha Sinha <shikha.sinha414@gmail.com>
To   statalist@hsphsun2.harvard.edu
Subject   Re: st: OLS and IV have opposite sign
Date   Mon, 15 Oct 2012 13:32:37 -0700

I am estimating the effect of family size (no of children) on
probability of work by mother. The endogenous variable is no of
children and I instrument this by gender of first born. If the first
child is female then family size should be greater.

I understand that IV correct the bias and OLS coeff may be upward or
downward biased. One can sign the bias (+) or (-) by examining the
correlation between the omited variable and endogenous, but What I do
not understand why the sign would change and what determines the
opposite sign. I get a negative OLS while a positive IV coeff.

Thanks,
Shikha

On Mon, Oct 15, 2012 at 1:11 PM, Austin Nichols <austinnichols@gmail.com> wrote:
> Shikha Sinha <shikha.sinha414@gmail.com>:
> The econometric reason is simple if you believe the exclusion
> restriction.  Tell us what the endog var is, what the excluded
> instruments are, and someone on the list will provide a (verbal)
> description of the bias producing a negative OLS coef estimate
> (evidently no longer visible in the consistent IV estimate).  Then
> someone else will weigh in on whether the exclusion restriction makes
> sense, probably...
>
> On Mon, Oct 15, 2012 at 3:58 PM, Shikha Sinha <shikha.sinha414@gmail.com> wrote:
>> Dear all,
>>
>> I am estimating an Ordinary least square (OLS) and Instrument variable
>> (IV) model, however the signs are opposite to each other. The OLS
>> coeff is negative, while the IV coeff is positive. Could anyone
>> explain what the signs in these two models are different- is there any
>> econometric reason for this?
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