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A Practical Guide to Shift-Share Instruments

Author

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  • Kirill Borusyak
  • Peter Hull
  • Xavier Jaravel

Abstract

A recent econometric literature shows two distinct paths for identification with shift-share instruments, leveraging either many exogenous shifts or exogenous shares. We present the core logic of both paths and practical takeaways via simple checklists. A variety of empirical settings illustrate key points.

Suggested Citation

  • Kirill Borusyak & Peter Hull & Xavier Jaravel, 2025. "A Practical Guide to Shift-Share Instruments," Journal of Economic Perspectives, American Economic Association, vol. 39(1), pages 181-204, Winter.
    • Handle: RePEc:aea:jecper:v:39:y:2025:i:1:p:181-204
    DOI: 10.1257/jep.20231370
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    More about this item

    JEL classification:

    • C26 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Instrumental Variables (IV) Estimation
    • R15 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Econometric and Input-Output Models; Other Methods
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J82 - Labor and Demographic Economics - - Labor Standards - - - Labor Force Composition
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

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