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Retrospective causal inference via matrix completion, with an evaluation of the effect of European integration on cross-border employment

Jason Poulos, Andrea Albanese (), Andrea Mercatanti () and Fan Li

No 2021-07, LISER Working Paper Series from Luxembourg Institute of Socio-Economic Research (LISER)

Abstract: We propose a method of retrospective counterfactual imputation in panel data settings with later-treated and always-treated units, but no never-treated units. We use the observed outcomes to impute the counterfactual outcomes of the later-treated using a matrix completion estimator. We propose a novel propensity-score and elapsed-time weighting of the estimator’s objective function to correct for differences in the observed covariate and unobserved fixed effects distributions, and elapsed time since treatment between groups. Our methodology is motivated by studying the effect of two milestones of European integration—the Free Movement of persons and the Schengen Agreement—on the share of cross-border workers in sending border regions. We apply the proposed method to the European Labour Force Survey (ELFS) data and provide evidence that opening the border almost doubled the probability of working beyond the border in Eastern European regions.

Keywords: Causal inference; cross-border employment; European integration; matrix completion; panel data (search for similar items in EconPapers)
JEL-codes: C21 C31 J21 J61 (search for similar items in EconPapers)
Pages: 28 pages
Date: 2021-09
New Economics Papers: this item is included in nep-eur and nep-ore
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Working Paper: Retrospective causal inference via matrix completion, with an evaluation of the effect of European integration on cross-border employment (2021) Downloads
Working Paper: Retrospective Causal Inference via Matrix Completion, with an Evaluation of the Effect of European Integration on Cross-Border Employment (2021) Downloads
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