Informational Content of Factor Structures in Simultaneous Binary Response Models

Shakeeb Khan, Arnaud Maurel and Yichong Zhang

No 28327, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We study the informational content of factor structures in discrete triangular systems. Factor structures have been employed in a variety of settings in cross sectional and panel data models, and in this paper we formally quantify their identifying power in a bivariate system often employed in the treatment effects literature. Our main findings are that imposing a factor structure yields point identification of parameters of interest, such as the coefficient associated with the endogenous regressor in the outcome equation, under weaker assumptions than usually required in these models. In particular, we show that a non-standard exclusion restriction that requires an explanatory variable in the outcome equation to be excluded from the treatment equation is no longer necessary for identification, even in cases where all of the regressors from the outcome equation are discrete. We also establish identification of the coefficient of the endogenous regressor in models with more general factor structures, in situations where one has access to at least two continuous measurements of the common factor.

JEL-codes: C14 C21 C25 C38 (search for similar items in EconPapers)
Date: 2021-01
New Economics Papers: this item is included in nep-dcm
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Related works:
Chapter: Informational Content of Factor Structures in Simultaneous Binary Response Models (2023)
Working Paper: Informational Content of Factor Structures in Simultaneous Binary Response Models (2022)
Working Paper: Informational Content of Factor Structures in Simultaneous Binary Response Models (2020)
Working Paper: Informational Content of Factor Structures in Simultaneous Binary Response Models (2019)
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