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When Is Parallel Trends Sensitive to Functional Form?

Jonathan Roth, Pedro H. C. Sant'Anna

arXiv 9 Oct 2020 · Econometrics · publishedEconometrica (2023) · 130 citations (OpenAlex)

arXiv:2010.04814 · PDF · DOI · OpenAlex · Extracted main text

Abstract

This paper assesses when the validity of difference-in-differences depends on functional form. We provide a novel characterization: the parallel trends assumption holds under all strictly monotonic transformations of the outcome if and only if a stronger “parallel trends”-type condition holds for the cumulative distribution function of untreated potential outcomes. This condition for parallel trends to be insensitive to functional form is satisfied if and essentially only if the population can be partitioned into a subgroup for which treatment is effectively randomly assigned and a remaining subgroup for which the distribution of untreated potential outcomes is stable over time. These conditions have testable implications, and we introduce falsification tests for the null that parallel trends is insensitive to functional form.

Citation extraction

14
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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
1Athey and Imbens (2006) Identification and Inference in Nonlinear Difference-in-Differences Models0.87452100%
2Kahn-Lang and Lang (2020) The Promise and Pitfalls of Differences-in-Differences: Reflections on 16 and Pregnant and Other Applications0.64422100%
3Cengiz, Dube, Lindner and Zipperer (2019) The Effect of Minimum Wages on Low-Wage Jobs0.58531100%
4Canay and Shaikh (2017) Practical and Theoretical Advances in Inference for Partially Identified Models0.51121100%
5Roth and Sant'Anna (2021) When Is Parallel Trends Sensitive to Functional Form?0.51121100%
6Roth (2022) Pre-test with Caution: Event-study Estimates After Testing for Parallel Trends self0.51121100%
7Bonhomme and Sauder (2011) Recovering Distributions in Difference-in-Differences models: A Comparison of Selective and Comprehensive Schooling0.40511100%
8Abadie (2005) Semiparametric Difference-in-Differences Estimators0.40511100%
9Almond, Hoynes and Schanzenbach (2011) Inside the War on Poverty: The Impact of Food Stamps on Birth Outcomes0.40511100%
10Callaway and Li (2019) Quantile treatment effects in difference in differences models with panel data0.40511100%

Showing the top 10 of 14 scored citations.

Cited by, within the corpus

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

Citing paperIntensityMentionsSections
1Evaluating the Impact of Regulatory Policies on Social Welfare in Difference-in-difference Settings0.95073
2Causal Interpretation of Regressions With Ranks0.92843
3Quantile and Distribution Treatment Effects on the Treated with Possibly Non-Continuous Outcomes0.87472
4Difference-in-Differences Designs: A Practitioner's Guide0.81142
5Selection and parallel trends0.73732
6What's Logs Got to do With it: On the Perils of log Dependent Variables and Difference-in-Differences0.73732
7An optimal transport approach to estimating causal effects via nonlinear difference-in-differences0.64422
8What's Trending in Difference-in-Differences? A Synthesis of the Recent Econometrics Literature0.64422
9Logs with zeros? Some problems and solutions0.64422
10Causal Panel Analysis under Parallel Trends: Lessons from a Large Reanalysis Study0.64422