A distributional synthetic control method for policy evaluation

Yi‐Ting Chen

Journal of Applied Econometrics, 2020, vol. 35, issue 5, 505-525

Abstract: We extend the synthetic control method to evaluate the distributional effects of policy intervention in the possible presence of poor matching. The counterfactuals (or intervention effects) are identified by matching a vector of pre‐intervention quantile residuals of the treated unit and a convex combination of its potential‐control counterparts. The residuals are orthogonal to a set of observable common factors that control for the potentially poor matching. We also apply our method to a set of case studies that explore the distributional effects of state‐level minimum‐wage hikes in the USA.

Date: 2020
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