%0 Report
        %A Eisenhauer, Philipp
%A Gabler, Janos
%A Janys, Lena
        %T Structural Models for Policy-Making: Coping with Parametric Uncertainty
        %D 2021
        %8 2021 Apr
        %I Institute of Labor Economics (IZA)
        %C Bonn
        %7 IZA Discussion Paper
        %N 14317
        %U https://www.iza.org/index.php/publications/dp14317
        %X The ex-ante evaluation of policies using structural econometric models is based on estimated parameters as a stand-in for the truth. This practice ignores uncertainty in the counterfactual policy predictions of the model. We develop a generic approach that deals with parametric uncertainty using uncertainty sets and frames model-informed policymaking  as a decision problem under uncertainty. The seminal human capital investment model by Keane and Wolpin (1997) provides us with a well-known, influential, and empirically-grounded test case. We document considerable uncertainty in their policy predictions and highlight the resulting policy recommendations from using different formal rules on decision-making under uncertainty.
        %K uncertainty quantification
%K structural estimation
%K statistical decision rules