Difference-in-differences with variation in treatment timing

Andrew Goodman-Bacon

Journal of Econometrics, 2021, vol. 225, issue 2, 254-277

Abstract: The canonical difference-in-differences (DD) estimator contains two time periods, ”pre” and ”post”, and two groups, ”treatment” and ”control”. Most DD applications, however, exploit variation across groups of units that receive treatment at different times. This paper shows that the two-way fixed effects estimator equals a weighted average of all possible two-group/two-period DD estimators in the data. A causal interpretation of two-way fixed effects DD estimates requires both a parallel trends assumption and treatment effects that are constant over time. I show how to decompose the difference between two specifications, and provide a new analysis of models that include time-varying controls.

Keywords: Difference-in-differences; Variation in treatment timing; Two-way fixed effects; Treatment effect heterogeneity (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (1533)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:econom:v:225:y:2021:i:2:p:254-277

DOI: 10.1016/j.jeconom.2021.03.014

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