de Luna, Xavier; Johansson, Per - Institutionen för Nationalekonomi, Umeå Universitet - 2001
We show that in sorting cross-sectional data, the endogeneity of a variable may be successfully detected by graphically examining the cumulative sum of the recursive residuals. An interesting case arises with a continuous or ordered (e.g., years of schooling) endogenous variable. Then, a...