The Craft of Labormetrics

Abstract

Using a wide array of examples from the literature and from original estimates, the author examines the pitfalls that make good empirical research in labor economics at least as much craft as statistical technique. Among the subjects discussed are the appropriateness and cleanliness of data; problems of extreme observations; the validity of attempts to produce exogeneity using instrumental variables, “natural experiments,” and structural models; and the treatment of selectivity and unobservable individual effects. The author stresses the importance of testing empirical results to ensure that they make sense, and of presenting them clearly and economically.