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Broken or Fixed Effects?

Charles E. Gibbons, Juan Carlos Suárez Serrato () and Michael B. Urbancic

No 20342, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We replicate eight influential papers to provide empirical evidence that, in the presence of heterogeneous treatment effects, OLS with fixed effects (FE) is generally not a consistent estimator of the average treatment effect (ATE). We propose two alternative estimators that recover the ATE in the presence of group-specific heterogeneity. We document that heterogeneous treatment effects are common and the ATE is often statistically and economically different from the FE estimate. In all but one of our replications, there is statistically significant treatment effect heterogeneity and, in six, the ATEs are either economically or statistically different from the FE estimates.

JEL-codes: C18 C21 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ecm and nep-exp
Date: 2014-07
Note: LS PE
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