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Bartik Instruments: What, When, Why, and How

Paul Goldsmith-Pinkham, Isaac Sorkin and Henry Swift

American Economic Review, 2020, vol. 110, issue 8, 2586-2624

Abstract: The Bartik instrument is formed by interacting local industry shares and national industry growth rates. We show that the typical use of a Bartik instrument assumes a pooled exposure research design, where the shares measure differential exposure to common shocks, and identification is based on exogeneity of the shares. Next, we show how the Bartik instrument weights each of the exposure designs. Finally, we discuss how to assess the plausibility of the research design. We illustrate our results through two applications: estimating the elasticity of labor supply, and estimating the elasticity of substitution between immigrants and natives.

JEL-codes: C51 F14 J15 J22 L60 R23 R32 (search for similar items in EconPapers)
Date: 2020
Note: DOI: 10.1257/aer.20181047
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