Difference-in-Differences with Variation in Treatment Timing / Andrew Goodman-Bacon.

Format:

Book

Author/Creator:

Goodman-Bacon, Andrew.

Contributor:

National Bureau of Economic Research.

Series:

Working Paper Series (National Bureau of Economic Research) no. w25018.

NBER working paper series no. w25018

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2018.

Summary:

The canonical difference-in-differences (DD) model contains two time periods, "pre" and "post", and two groups, "treatment" and "control". Most DD applications, however, exploit variation across groups of units that receive treatment at different times. This paper derives an expression for this general DD estimator, and shows that it is a weighted average of all possible two-group/two-period DD estimators in the data. This result provides detailed guidance about how to use regression DD in practice. I define the DD estimand and show how it averages treatment effect heterogeneity and that it is biased when effects change over time. I propose a new balance test derived from a unified definition of common trends. I show how to decompose the difference between two specifications, and I apply it to models that drop untreated units, weight, disaggregate time fixed effects, control for unit-specific time trends, or exploit a third difference.

Notes:

Print version record

September 2018.