A note on difference-in-difference estimation by Fixed Effects and OLS when there is panel non-response

Daniel Fernandez Kranz, Michael Lechner and Núria Rodriguez-Planas

No 1507, Economics Working Paper Series from University of St. Gallen, School of Economics and Political Science

Abstract: In this note, we show that the OLS and fixed-effects (FE) estimators of the popular differ-ence-in-differences model may deviate when there is time varying panel non-response. If such non-response does not affect the common-trend assumption, then OLS and FE are consistent, but OLS is more precise. However, if non-response is affecting the common-trend assumption, then FE estimation may still be consistent, while OLS will be inconsistent. We provide simulation as well as empirical evidence for this phenomenon to occur. We conclude that in case of unbalanced panels, any evidence of deviating OLS and FE estimates should be considered as evidence that non-response is not ignorable for the differences-in-differences estimation.

Keywords: Difference-in-difference estimation; attrition; panel estimation; balanced panel; unbalanced panel (search for similar items in EconPapers)
JEL-codes: C21 C31 (search for similar items in EconPapers)
Pages: 16 pages
Date: 2015-03
New Economics Papers: this item is included in nep-ecm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://ux-tauri.unisg.ch/RePEc/usg/econwp/EWP-1507.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:usg:econwp:2015:07

Access Statistics for this paper

More papers in Economics Working Paper Series from University of St. Gallen, School of Economics and Political Science Contact information at EDIRC.
Bibliographic data for series maintained by ().