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The role of parallel trends in event study settings: An application to environmental economics

Michelle Marcus, Pedro H. C. Sant'Anna

arXiv 3 Sep 2020 · Econometrics · publishedJournal of the Association of Environmental and Resource Economists (2020) · 25 citations (OpenAlex)

arXiv:2009.01963 · PDF · DOI · OpenAlex · Extracted main text

Abstract

Difference-in-Differences (DID) research designs usually rely on variation of treatment timing such that, after making an appropriate parallel trends assumption, one can identify, estimate, and make inference about causal effects. In practice, however, different DID procedures rely on different parallel trends assumptions (PTA), and recover different causal parameters. In this paper, we focus on staggered DID (also referred as event-studies) and discuss the role played by the PTA in terms of identification and estimation of causal parameters. We document a “robustness” vs. “efficiency” trade-off in terms of the strength of the underlying PTA, and argue that practitioners should be explicit about these trade-offs whenever using DID procedures. We propose new DID estimators that reflect these trade-offs and derived their large sample properties. We illustrate the practical relevance of these results by assessing whether the transition from federal to state management of the Clean Water Act affects compliance rates.

Citation extraction

26
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60
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appendix boundary found by none_found · 100% of the source is main text. Read the extracted text to check this.

Most heavily cited references

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.

ReferenceIntensityMentionsSectionsMain text
1Borusyak and Jaravel (2017) Revisiting Event Study Designs0.92843100%
2Grooms (2015) Enforcing the Clean Water Act: The effect of state-level corruption on compliance0.874192100%
3Goodman-Bacon (2019) Difference-in-Differences with Variation in Treatment Timing0.81142100%
Chernozhukov2013unmatched citation key Chernozhukov20130.64422100%
Gibbons2018unmatched citation key Gibbons20180.64422100%
6Laporte and Windmeijer (2005) Estimation of panel data models with binary indicators when treatment effects are not constant over time0.64422100%
7Wooldridge (2005) Fixed-Effects and Related Estimators for Correlated Random-Coefficient and Treatment-Effect Panel Data Models0.64422100%
8Callaway and Sant'Anna (2020) Difference-in-Differences with Multiple Time Periods0.51121100%
9Cunningham (2018)0.51121100%
10Hansen (1982) Large Sample Properties of Generalized Method of Moments Estimators0.51121100%

Showing the top 10 of 28 scored citations. 2 of these could not be matched to a bibliography entry, so only the citation key is shown.

Cited by, within the corpus

arXiv econ.EM papers that cite this one, ranked by how heavily they lean on it.

Citing paperIntensityMentionsSections
1Difference-in-differences with as few as two cross-sectional units – A new perspective to the democracy–growth debate0.84333
2Revisiting Event Study Designs: Robust and Efficient Estimation0.73742
3Difference-in-Differences Designs: A Practitioner's Guide0.64441
4Difference-in-Differences with Multiple Time Periods0.51121
5What's Trending in Difference-in-Differences? A Synthesis of the Recent Econometrics Literature0.51121
6Treatment Effects in Staggered Adoption Designs with Non-Parallel Trends0.51121
7Inference in Difference-in-Differences: How Much Should We Trust in Independent Clusters?0.40511
8Inference in Difference-in-Differences with Few Treated Units and Spatial Correlation0.40511
9Two-Way Fixed Effects and Differences-in-Differences with Heterogeneous Treatment Effects: A Survey0.40511
10Efficient Difference-in-Differences and Event Study Estimators0.40511