Instrumental variables was first used in the 1920s to estimate supply and demand elasticities and later to correct for measurement error in single equation models. Recently, instrumental variables have been widely used to reduce bias from omitted variables in estimates of causal relationships....

This chapter provides an overview of the methodological and practical issues that arise when estimating causal relationships that are of interest to labor economists. The subject matter includes identification, data collection, and measurement problems. Four identification strategies are...