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Fuzzy Differences-in-Differences

Clément de Chaisemartin and Xavier D'Haultfoeuille

The Warwick Economics Research Paper Series (TWERPS) from University of Warwick, Department of Economics

Abstract: In many applications of the differences-in-differences (DID) method, the treatment increases more in the treatment group, but some units are also treated in the control group. In such fuzzy designs, a popular estimator of treatment effects is the DID of the outcome divided by the DID of the treatment, or OLS and 2SLS regressions with time and group fixed effects estimating weighted averages of this ratio across groups. We start by showing that when the treatment also increases in the control group, this ratio estimates a causal effect only if treatment effects are homogenous in the two groups. Even when the distribution of treatment is stable, it requires that the effect of time be the same on all counterfactual outcomes. As this assumption is not always applicable, we propose two alternative estimators. The first estimator relies on a generalization of common trends assumptions to fuzzy designs, while the second extends the changes-in-changes estimator of Athey & Imbens (2006). When the distribution of treatment changes in the control group, treatment effects are partially identified. Finally, we prove that our estimators are asymptotically normal and use them to revisit applied papers using fuzzy designs.

Keywords: differences-in-differences; changes-in-changes; quantile treatment effects; partitial identification; returns to education (search for similar items in EconPapers)
JEL-codes: C21 C23 (search for similar items in EconPapers)
Date: 2015
New Economics Papers: this item is included in nep-ecm
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https://warwick.ac.uk/fac/soc/economics/research/w ... 5_dechaisemartin.pdf

Related works:
Journal Article: Fuzzy Differences-in-Differences (2018) Downloads
Working Paper: Fuzzy differences-in-differences (2015) Downloads
Working Paper: Fuzzy Changes-in-Changes (2014) Downloads
Working Paper: Fuzzy differences in differences (2012) Downloads
Working Paper: Fuzzy differences in differences (2012) Downloads
Working Paper: Fuzzy Differences in Differences (2011) Downloads
Working Paper: Fuzzy Differences in Differences (2010) Downloads
Working Paper: Fuzzy Differences-in-Differences Downloads
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