Canonical Correlation and Assortative Matching: A Remark
Arnaud Dupuy, Alfred Galichon
TL;DR
This paper critiques the use of linear canonical correlation for estimating matching weights in Beckerian marriage models, highlighting its inconsistency and proposing alternative solutions.
Contribution
It identifies the inconsistency of linear canonical correlation in this context and offers new methods to improve estimation accuracy.
Findings
Linear canonical correlation is inconsistent for estimating matching weights.
Proposes alternative solutions to improve estimation.
Highlights limitations of existing techniques in Beckerian models.
Abstract
In the context of the Beckerian theory of marriage, when men and women match on a single-dimensional index that is the weighted sum of their respective multivariate attributes, many papers in the literature have used linear canonical correlation, and related techniques, in order to estimate these weights. We argue that this estimation technique is inconsistent and suggest some solutions.
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