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he following is an excerpt from The Labor Market Effects of Rising Health Insurance Premiums, by Katherine Baicker, Amitabh Chandra. If workers in a certain

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he following is an excerpt from "The Labor Market Effects of Rising Health Insurance Premiums," by Katherine Baicker, Amitabh Chandra. If workers in a certain sector of the economy or those who are married are systematically more likely to have different levels of unobservable characteristics that affe health insurance premiums, then such a correlation is possible. This problem is identical to the standard endogeneity problem in program evaluation, where receipt of treatment is correlated with unobservable characteristics of the person receiving treatment. A solution to this problem is to instrument for imputed premiums using variables that are uncorrelated with &; and m; but are correlated with imputed health insurance premiums. In our analysis we use state-level, per-capita medical malpr payments as an instrument for imputed premiums. other words, in order for malpractice payments to be a valid instrument for health insurance premiums, it must be the case that medical malpractice payments with remiums. It must also be the case that malpractice payments _ with the unobservable characteristics of workers that might impact the outcome variable. X O are not correlated; are not correlated are strongly correlated; are strongly correlated are not correlated; are strongly correlated are strongly correlated; are not correlated

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