Authors:

  • Maximilian Kasy

Excerpt

How to use economic theory to improve estimators, with an application to labor demand and wage inequality in Europe. Maximilian Kasy, August 28, 2015, Paper. "Economic theory, when it has empirical content, provides testable restrictions on empirically identified objects. These empirical objects might be estimated in an unrestricted way, leading to estimates of potentially large variance, or subject to the theoretical restrictions, leading to estimates of lower variance which are potentially biased, inconsistent, and non-robust. We propose an alternative approach, based on the empirical Bayes paradigm, which avoids both large variance..." Link