On Endogeneity Bias: Some General Remarks and Correction of the ROIW Paper by Bourguignon, Ferreira, and Menéndez (2007)


  • Note: The author would like to thank the Editor and an anonymous referee for their valuable comments which helped to improve the presentation of results.

Correspondence to: Jaya Krishnakumar, Department of Economics, University of Geneva, 40, Bd. du Pont d'Arve, CH-1211 Geneva 4, Switzerland (jaya.krishnakumar@unige.ch).


This paper is a short note on the question of correcting for endogeneity bias in a regression. It also points out errors and omissions in the derivation of this bias in Bourguignon, Ferreira, and Menéndez (2007). We show that some assumptions needed for the derivation are not explicit and even under these assumptions, certain simplifications adopted are not valid. We support our points using simulation experiments.