Are Bartik Regressions Always Robust to Heterogeneous Treatment Effects?

Clément de Chaisemartin and Ziteng Lei ()
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Ziteng Lei: Renmin University of China = Université Renmin de Chine

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Abstract: Bartik regressions use locations' differential exposure to nationwide sector-level shocks as an instrument to estimate the effect of a location-level treatment on an outcome. We show that under parallel-trends assumptions, Bartik regressions may estimate weighted sums of location-and-period-specific treatment effects, with some negative weights. Accordingly, they may not be robust to heterogeneous effects across locations or periods. We provide simple diagnostic tools researchers may use to assess the robustness of their regression. Finally, we propose alternative correlated-random-coefficient estimators that are more robust to heterogeneous effects than Bartik regressions. We use our results to revisit two empirical applications.

Date: 2022-07-21
New Economics Papers: this item is included in nep-ecm
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Working Paper: Are Bartik Regressions Always Robust to Heterogeneous Treatment Effects? (2022)
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