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Design-Robust Two-Way-Fixed-Effects Regression For Panel Data

Dmitry Arkhangelsky, Guido W. Imbens, Lihua Lei, Xiaoman Luo

arXiv 29 Jul 2021 · Econometrics · publishedQuantitative Economics (2024) · 14 citations (OpenAlex)

arXiv:2107.13737 · PDF · DOI · OpenAlex · Extracted main text

Abstract

We propose a new estimator for average causal effects of a binary treatment with panel data in settings with general treatment patterns. Our approach augments the popular two-way-fixed-effects specification with unit-specific weights that arise from a model for the assignment mechanism. We show how to construct these weights in various settings, including the staggered adoption setting, where units opt into the treatment sequentially but permanently. The resulting estimator converges to an average (over units and time) treatment effect under the correct specification of the assignment model, even if the fixed effect model is misspecified. We show that our estimator is more robust than the conventional two-way estimator: it remains consistent if either the assignment mechanism or the two-way regression model is correctly specified. In addition, the proposed estimator performs better than the two-way-fixed-effect estimator if the outcome model and assignment mechanism are locally misspecified. This strong double robustness property underlines and quantifies the benefits of modeling the assignment process and motivates using our estimator in practice. We also discuss an extension of our estimator to handle dynamic treatment effects.

Citation extraction

69
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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
1Susan Athey and Guido W Imbens (2022) Design-based analysis in difference-in-differences settings with staggered adoption self0.87482100%
2Jonathan Roth and Pedro HC Sant’Anna (2023) Efficient estimation for staggered rollout designs0.87452100%
3Iavor Bojinov, Ashesh Rambachan, and Neil Shephard (2021) Panel experiments and dynamic causal effects: A finite population perspective0.81142100%
4Dmitry Arkhangelsky and Guido W Imbens (2022) Doubly robust identification for causal panel data models self0.73732100%
5Brantly Callaway and Pedro HC Sant’Anna (2021) Difference-in-differences with multiple time periods0.73732100%
6Victor Chernozhukov, Denis Chetverikov, Mert Demirer, Esther Duflo,… (2018) Double/debiased machine learning for treatment and structural parameters0.73732100%
7Clement De Chaisemartin and Xavier d'Haultfoeuille (2020) Two-way fixed effects estimators with heterogeneous treatment effects0.73732100%
8Andrew Goodman-Bacon (2021) Difference-in-differences with variation in treatment timing0.73732100%
9Joseph Kang and Joseph Schafer (2007) Demystifying double robustness: A comparison of alternative strategies for estimating a population mean from incomplete data0.73732100%
10James M Robins, Andrea Rotnitzky, and Lue Ping Zhao (1994) Estimation of regression coefficients when some regressors are not always observed0.73732100%

Showing the top 10 of 69 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
1Difference-in-Differences Designs: A Practitioner's Guide0.40511
2Inferring Treatment Effects in Large Panels by Uncovering Latent Similarities0.40511
3Time-Varying Heterogeneous Treatment Effects in Event Studies0.40511
4Beyond Parallel Trends: An Identification-Strategy-Robust Approach to Causal Inference with Panel Data0.40511
5Biodiversity Media Narratives and Stock Market Performance: Evidence from Europe0.40511