Model specification and endogeneity

This paper considers the treatment of endogenous explanatory variables in the work of the Cowles Commission and in Carl Christʹs classic 1966 textbook, and certain problems that arise when this approach is followed in areas such as the study of female labor supply where a priori knowledge is sparse or uncertain. The motivations for, and evidence against the use of, mixed estimation approaches involving exogeneity pretests are explored. The paper concludes with a consideration of complementary and alternative empirical approaches, including greater use of predictive evaluation as suggested by Christ.