Direct and Indirect Effects based on Changes-in-Changes

Martin Huber, Mark Schelker and Anthony Strittmatter

Journal of Business & Economic Statistics, 2022, vol. 40, issue 1, 432-443

Abstract: We propose a novel approach for causal mediation analysis based on changes-in-changes assumptions restricting unobserved heterogeneity over time. This allows disentangling the causal effect of a binary treatment on a continuous outcome into an indirect effect operating through a binary intermediate variable (called mediator) and a direct effect running via other causal mechanisms. We identify average and quantile direct and indirect effects for various subgroups under the condition that the outcome is monotonic in the unobserved heterogeneity and that the distribution of the latter does not change over time conditional on the treatment and the mediator. We also provide a simulation study and two empirical applications regarding a training program evaluation and maternity leave reform.

Date: 2022
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Related works:
Working Paper: Direct and Indirect Effects based on Changes-in-Changes (2019)
Working Paper: Direct and Indirect Effects Based on Changes-in-Changes (2019)
Working Paper: Direct and Indirect Effects based on Changes-in- Changes (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:taf:jnlbes:v:40:y:2022:i:1:p:432-443

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DOI: 10.1080/07350015.2020.1831929

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