<p>There are two main criteria for defining an IV:</p>

<p>(i) It causes variation in the treatment variable;
(ii) It does not have a direct effect on the outcome variable, only indirectly through the
treatment variable. </p>

<p><a href="https://umanitoba.ca/faculties/health_sciences/medicine/units/chs/departmental_units/mchp/protocol/media/Instrumental_variables.pdf" rel="nofollow noreferrer">https://umanitoba.ca/faculties/health_sciences/medicine/units/chs/departmental_units/mchp/protocol/media/Instrumental_variables.pdf</a></p>

<p>In this case I would say look at these data sets: </p>

<p>unemployment claims data;</p>

<p>employment to population ratios; </p>

<p>labor force participation rates;</p>

<p>I found this paper that could help your efforts:
Bartik, Timothy, Instrumental Variable Estimates of the Labor Market Spillover Effects of Welfare Reform (April 2002). W.E. Upjohn Institute Staff Working Paper No. 02-78. Available at SSRN: <a href="https://ssrn.com/abstract=313160" rel="nofollow noreferrer">https://ssrn.com/abstract=313160</a> or <a href="http://dx.doi.org/10.2139/ssrn.313160" rel="nofollow noreferrer">http://dx.doi.org/10.2139/ssrn.313160</a></p>

CC BY-SA 4.0
2020-03-28T20:52:29.007Z
2020-03-28T23:04:35.673Z
2020-03-28T23:04:35.673Z
Mike J
<p>I have the following regression model:</p>

<p>Marijuana Usei = β0 + β1Unemployedi + β2Personal Incomei + β3Educational Attainmenti+ β4Sexi + β5Agei + β6Racei + εi</p>

<p>The model is a probit model</p>

<p>I need to find an instrumental variable (IV)for the "unemployed" variable. What criteria would this IV have to meet?</p>

<p>Thank you!</p>

<econometrics>
Finding an instrumental variable for unemployment
pelsr
# Finding an instrumental variable for unemployment

(Asked by: username_0 on 2020-03-25)

I have the following regression model:

Marijuana Usei = β0 + β1Unemployedi + β2Personal Incomei + β3Educational Attainmenti+ β4Sexi + β5Agei + β6Racei + εi

The model is a probit model

I need to find an instrumental variable (IV)for the "unemployed" variable. What criteria would this IV have to meet?

Thank you!

**Tags:** econometrics

---

## 1 answers

### Answer by username_1 on 2020-03-28. Score: 0

There are two main criteria for defining an IV:

(i) It causes variation in the treatment variable;
(ii) It does not have a direct effect on the outcome variable, only indirectly through the
treatment variable.

<https://umanitoba.ca/faculties/health_sciences/medicine/units/chs/departmental_units/mchp/protocol/media/Instrumental_variables.pdf>

In this case I would say look at these data sets:

unemployment claims data;

employment to population ratios;

labor force participation rates;

I found this paper that could help your efforts:
Bartik, Timothy, Instrumental Variable Estimates of the Labor Market Spillover Effects of Welfare Reform (April 2002). W.E. Upjohn Institute Staff Working Paper No. 02-78. Available at SSRN: <https://ssrn.com/abstract=313160> or <http://dx.doi.org/10.2139/ssrn.313160>


---

