Increasing the credibility of the twin birth instrument

Helmut Farbmacher, Raphael Guber, Johan Vikström

Research output: Contribution to journalArticlepeer-review

15 Scopus citations

Abstract

Twin births are an important instrument for the endogenous fertility decision. However, twin births are not exogenous either as dizygotic twinning is correlated with maternal characteristics. Following the medical literature, we assume that monozygotic twins are exogenous, and construct a new instrument, which corrects for the selection although monozygotic twinning is usually unobserved in survey and administrative datasets. Using administrative data from Sweden, we show that the usual twin instrument is related to observed and unobserved determinants of economic outcomes, while our new instrument is not. In our applications we find that the classical twin instrument underestimates the negative effect of fertility on labor income. This finding is in line with the observation that high earners are more likely to delay childbearing and hence have a higher risk to get dizygotic twins.

Original languageEnglish
Pages (from-to)457-472
Number of pages16
JournalJournal of Applied Econometrics
Volume33
Issue number3
DOIs
StatePublished - 1 Apr 2018
Externally publishedYes

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