Rodrigo Adão, Michal Kolesár, Eduardo Morales
arXiv 20 Jun 2018 · Econometrics · 80 citations (OpenAlex)
arXiv:1806.07928 · PDF · DOI · OpenAlex · Extracted main text
We study inference in shift-share regression designs, such as when a regional outcome is regressed on a weighted average of sectoral shocks, using regional sector shares as weights. We conduct a placebo exercise in which we estimate the effect of a shift-share regressor constructed with randomly generated sectoral shocks on actual labor market outcomes across U.S. Commuting Zones. Tests based on commonly used standard errors with 5% nominal significance level reject the null of no effect in up to 55% of the placebo samples. We use a stylized economic model to show that this overrejection problem arises because regression residuals are correlated across regions with similar sectoral shares, independently of their geographic location. We derive novel inference methods that are valid under arbitrary cross-regional correlation in the regression residuals. We show using popular applications of shift-share designs that our methods may lead to substantially wider confidence intervals in practice.
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The works this paper leans on most, across its whole bibliography — not restricted to papers in our corpus. Ranked by composite intensity, which combines how often a work is mentioned, how many sections mention it, and how much of that falls in the main text rather than the appendix.
| Reference | Intensity | Mentions | Sections | Main text | |
|---|---|---|---|---|---|
| 1 | Autor, Dorn and Hanson (2013) The China Syndrome: Local Labor Market Effects of Import Competition in the United States | 1.000 | 11 | 4 | 100% |
| 2 | Goldsmith-Pinkham, Sorkin and Swift (2018) Bartik Instruments: What, When, Why, and How | 1.000 | 11 | 3 | 100% |
| 3 | Borusyak, Hull and Jaravel (2018) Quasi-experimental Shift-share Research Designs | 1.000 | 8 | 4 | 100% |
| 4 | Bartik (1991) | 0.874 | 7 | 2 | 100% |
| 5 | Kovak (2013) Regional effects of trade reform: What is the correct measure of liberalization? | 0.843 | 3 | 3 | 100% |
| 6 | Acemoglu and Restrepo (2019) Robots and Jobs: Evidence from US Labor Markets | 0.644 | 2 | 2 | 100% |
| 7 | Adão, Arkolakis and Esposito (2019) Spatial linkages, Global Shocks, and Local Labor Markets: Theory and Evidence | 0.644 | 2 | 2 | 100% |
| 8 | Autor and Duggan (2003) The Rise in the Disability Rolls and the Decline in Unemployment | 0.644 | 2 | 2 | 100% |
| 9 | Conley (1999) GMM Estimation with Cross Sectional Dependence | 0.644 | 2 | 2 | 100% |
| 10 | Dix-Carneiro and Kovak (2017) Trade Liberalization and Regional Dynamics | 0.644 | 2 | 2 | 100% |
Showing the top 10 of 65 scored citations.
arXiv econ.EM papers that cite this one, ranked by how heavily they lean on it.
| Citing paper | Intensity | Mentions | Sections | |
|---|---|---|---|---|
| 1 | Overidentification in Shift-Share Designs | 1.000 | 49 | 9 |
| 2 | On Policy Evaluation With Aggregate Time-Series Instruments | 1.000 | 6 | 3 |
| 3 | ASSESSING INFERENCE METHODS | 0.916 | 26 | 5 |
| 4 | Shift-Share Designs in Political Science | 0.830 | 14 | 5 |
| 5 | Estimating Demand with Recentered Instruments | 0.811 | 4 | 2 |
| 6 | Nonlinear Treatment Effects in Shift-Share Designs | 0.737 | 3 | 2 |
| 7 | Quasi-Experimental Shift-Share Research Designs | 0.711 | 39 | 8 |
| 8 | Using Multiple Outcomes to Adjust Standard Errors for Spatial Correlation | 0.511 | 2 | 1 |
| 9 | Inference with few treated units | 0.511 | 2 | 1 |
| 10 | Microfoundations and the Causal Interpretation of Price-Exposure Designs | 0.511 | 2 | 1 |