Treatment effect identification using alternative parallel assumptions

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dc.contributor.author Mora, Ricardo
dc.contributor.author Reggio, Iliana
dc.contributor.editor Universidad Carlos III de Madrid. Departamento de Economía
dc.date.accessioned 2013-04-04T14:24:23Z
dc.date.available 2013-04-04T14:24:23Z
dc.date.issued 2012-12
dc.identifier.issn 2340-5031
dc.identifier.uri http://hdl.handle.net/10016/16065
dc.description.abstract The core assumption to identify the treatment effect in difference-in-differences estimators is the so-called Parallel Paths assumption, namely that the average change in outcome for the treated in the absence of treatment equals the average change in outcome for the non-treated. We define a family of alternative Parallel assumptions and show for a number of frequently used empirical specifications which parameters of the model identify the treatment effect under the alternative Parallel assumptions. We further propose a fully flexible model which has two desirable features not present in the usual econometric specifications implemented in applied research. First, it allows for flexible dynamics and for testing restrictions on these dynamics. Second, it does not impose equivalence between alternative Parallel assumptions. We illustrate the usefulness of our approach by revising the results of several recent papers in which the difference-in-differences technique has been applied.The core assumption to identify the treatment effect in difference-in-differences estimators is the so-called Parallel Paths assumption, namely that the average change in outcome for the treated in the absence of treatment equals the average change in outcome for the non-treated. We define a family of alternative Parallel assumptions and show for a number of frequently used empirical specifications which parameters of the model identify the treatment effect under the alternative Parallel assumptions. We further propose a fully flexible model which has two desirable features not present in the usual econometric specifications implemented in applied research. First, it allows for flexible dynamics and for testing restrictions on these dynamics. Second, it does not impose equivalence between alternative Parallel assumptions. We illustrate the usefulness of our approach by revising the results of several recent papers in which the difference-in-differences technique has been applied
dc.description.sponsorship Both authors acknowledge financial help from the Spanish government through grant ECO2012-31358
dc.format.mimetype application/pdf
dc.format.mimetype text/plain
dc.language.iso eng
dc.relation.ispartofseries UC3M Working papers. Economics
dc.relation.ispartofseries 12-33
dc.rights Atribución-NoComercial-SinDerivadas 3.0 España
dc.rights.uri http://creativecommons.org/licenses/by-nc-nd/3.0/es/
dc.subject.other Difference-in-differences
dc.subject.other Parallel paths
dc.subject.other Treatment effect
dc.title Treatment effect identification using alternative parallel assumptions
dc.type workingPaper
dc.subject.eciencia Economía
dc.rights.accessRights openAccess
dc.date.modified 2013-04-04
dc.relation.projectID Gobierno de España. ECO2012-31358
dc.type.version submitedVersion
dc.identifier.uxxi DT/0000000820
dc.identifier.repec we1233
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