The procedure of comparing different instrumental variables estimates of the same parameter is an example of testing overidentifying restrictions. Option A
The joint dependence of earnings and schooling on ability, which is not immediately observable, is an example of an instrumental variable. However, we can use test results as a proxy for ability.
In observational research, instrumental variables (IVs) are employed to account for confounding and measurement error. They make it possible to draw conclusions about causes from observational data. IVs can correct for both observed and unobserved confounding effects, just like propensity scores can.
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