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Causal mediation analysis in economics: Objectives, assumptions, models

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  • Viviana Celli

Abstract

Mediation analysis aims at identifying and evaluating the mechanisms through which treatment affects an outcome. The goal is to disentangle the total treatment effect into two components: the indirect effect that occurs due to one or more intermediate variables, known as mediators, and the direct effect that captures all other possible explanations for why a treatment works. This paper reviews the methodological advancements in the literature on causal mediation in economics, specifically quasi‐experimental designs. I define the parameters of interest, the main assumptions and the identification strategies under the counterfactual approach, and present the Instrumental Variables (IV), Difference‐in‐Differences (DID), and Synthetic Control (SC) methods.

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  • Viviana Celli, 2022. "Causal mediation analysis in economics: Objectives, assumptions, models," Journal of Economic Surveys, Wiley Blackwell, vol. 36(1), pages 214-234, February.
    • Handle: RePEc:bla:jecsur:v:36:y:2022:i:1:p:214-234
    DOI: 10.1111/joes.12452
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