Novel Shift-Share Instruments and Their Applications

Benjamin Ferri

No 1053, Boston College Working Papers in Economics from Boston College Department of Economics

Abstract: Shift-Share (Bartik) instruments are among the most important tools for causal identification in economics. In this paper, I crystallize main ideas underlying Shift-Share instruments - their core structure, distinctive claim to validity as instruments, history, uses, and wealth of varieties. I argue that the essence of the Shift-Share approach is to decompose the endogenous explanatory variable into an accounting identity with multiple component parts; preserve that which is most exogenous in the accounting identity, and neutralize that which is most endogenous. Following this framework, I show clearly how several variants in the literature are related. I then develop formulas for several new variants. Particularly, I show how to develop Shift-Share instruments for distribution summaries beyond the mean - the variance, skew, absolute deviation around a central point, and Gini coefficient. As an empirical application that highlights the themes of the paper, I measure the effect of earnings inequality on rates of single parenting in the U.S., comparing results using each of various alternative instruments for the Gini coefficient.

Keywords: shift-share; bartik; instrumental variables; panel data; labor demand and supply; earnings inequality; single parenting (search for similar items in EconPapers)
JEL-codes: C23 C26 D31 J20 R12 R23 (search for similar items in EconPapers)
Date: 2022-09-27
New Economics Papers: this item is included in nep-ecm, nep-geo and nep-lma
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