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Ordinal response generalized difference in differences with varying categories: The health effect of a disability program in Korea

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  • Young‐sook Kim
  • Myoung‐jae Lee

Abstract

We consider the use of difference in differences (DD) to evaluate the effect of an activity assistance program on the health of severely disabled Koreans. There are, however, 2 problems in the data: the number of response categories for self‐assessed health changed over the waves of the repeated cross‐section survey and the “parallel untreated response path” assumption for DD is suspect. We show how to overcome these problems by renormalizing parameters and applying “generalized difference in differences (GDD).” We find a significantly positive effect of the program with DD, but not with GDD. Our solutions should prove useful in applications in which one or other of these problems arise.

Suggested Citation

  • Young‐sook Kim & Myoung‐jae Lee, 2017. "Ordinal response generalized difference in differences with varying categories: The health effect of a disability program in Korea," Health Economics, John Wiley & Sons, Ltd., vol. 26(9), pages 1123-1131, September.
    • Handle: RePEc:wly:hlthec:v:26:y:2017:i:9:p:1123-1131
    DOI: 10.1002/hec.3526
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    References listed on IDEAS

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    1. Myoung-jae Lee, 2016. "Generalized Difference in Differences With Panel Data and Least Squares Estimator," Sociological Methods & Research, , vol. 45(1), pages 134-157, February.
    2. Joshua D. Angrist & Jörn-Steffen Pischke, 2009. "Mostly Harmless Econometrics: An Empiricist's Companion," Economics Books, Princeton University Press, edition 1, number 8769.
    3. Lee, Myoung-jae, 2016. "Matching, Regression Discontinuity, Difference in Differences, and Beyond," OUP Catalogue, Oxford University Press, number 9780190258740.
    4. Seema Jayachandran & Adriana Lleras-Muney & Kimberly V. Smith, 2010. "Modern Medicine and the Twentieth Century Decline in Mortality: Evidence on the Impact of Sulfa Drugs," American Economic Journal: Applied Economics, American Economic Association, vol. 2(2), pages 118-146, April.
    5. Puhani, Patrick A., 2012. "The treatment effect, the cross difference, and the interaction term in nonlinear “difference-in-differences” models," Economics Letters, Elsevier, vol. 115(1), pages 85-87.
    6. Ricardo Mora & Iliana Reggio, 2015. "didq: A command for treatment-effect estimation under alternative assumptions," Stata Journal, StataCorp LP, vol. 15(3), pages 796-808, September.
    7. Mora, Ricardo & Reggio, Iliana, 2012. "Treatment effect identification using alternative parallel assumptions," UC3M Working papers. Economics we1233, Universidad Carlos III de Madrid. Departamento de Economía.
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    Cited by:

    1. Myoung-jae Lee & Yasuyuki Sawada, 2020. "Review on Difference in Differences," Korean Economic Review, Korean Economic Association, vol. 36, pages 135-173.

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