Altonji, Joseph G., Todd E. Elder, and Christopher R. Taber. 2005. “An Evaluation of Instrumental Variable Strategies for Estimating the Effects of Catholic Schooling.” Journal of Human Resources 40(4): 791-821.

Several previous studies have relied on religious affiliation and the proximity to Catholic schools as exogenous sources of variation for identifying the effect of Catholic schooling on a wide variety of outcomes. Using three separate approaches, we examine the validity of these instrumental variables. We find that none of the candidate instruments is a useful source of identification in currently available data sets. We also investigate the role of exclusion restrictions versus nonlinearity as the source of identification in bivariate probit models. The analysis may be useful as a template for the assessment of instrumental variables strategies in other applications.

Joseph G. Altonji is a professor of economics at Yale University and a researcher with the National Bureau of Economic Research. Todd E. Elder is an assistant professor of economics and of labor and industrial relations at the University of Illinois at Urbana-Champaign. Christopher R. Taber is an associate professor of economics at Northwestern University and a researcher with the National Bureau of Economic Research. This research was supported by the Institute for Policy Research, Northwestern University, the National Science Foundation under grant SBR 9512009, and the NIH-NICHD under grant R01 HD36480-03. The authors are grateful to Timothy Donohue for excellent research assistance and to Jeffrey Grogger, Derek Neal, and participants in seminars at Boston College, Michigan State University, Northwestern University, Purdue University, University College London, University of Missouri, University of Virginia, and University of Wisconsin for helpful comments. The authors claim responsibility for the remaining shortcomings of the paper. The data used in this article are confidential and can be obtained by special agreement with the National Center for Educational Statistics: http://nces.ed.gov/pubsearch/licenses.asp.