Difference-in-differences with "bad controls"

Carolina Caetano, Brantly Callaway VI, Stroud Payne and Hugo Sant'Anna

Papers from arXiv.org

Abstract: This paper considers difference-in-differences identification strategies when the parallel trends assumption holds after conditioning on covariates that may themselves be affected by the treatment (often referred to as "bad controls"). We show that common approaches such as simply dropping bad controls are often ill-advised and develop two alternative approaches that allow bad controls to function as genuine controls despite being affected by treatment. First, we derive explicit conditions that rationalize conditioning only on pre-treatment values of the bad control, leading naturally to the Callaway and Sant'Anna (2021) estimator with pre-treatment values as covariates. Second, under a covariate unconfoundedness condition, we develop imputation and double/debiased machine learning estimators that recover the average treatment effect on the treated. We extend these results to staggered treatment adoption, provide pre-tests for the identifying assumptions, and apply the methods to study the effects of job displacement on earnings.

Date: 2026-08
References: Add references at CitEc
Citations:

Downloads: (external link)
https://arxiv.org/pdf/2608.03881 Latest version (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:arx:papers:2608.03881

Access Statistics for this paper

More papers in Papers from arXiv.org
Bibliographic data for series maintained by arXiv administrators ().