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Difference-in-differences techniques for spatial data: Local autocorrelation and spatial interaction

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  • Delgado, Michael S.
  • Florax, Raymond J.G.M.

Abstract

We consider treatment effect estimation via a difference-in-difference approach for spatial data with local spatial interaction such that the potential outcome of observed units depends on their own treatment as well as on the treatment status of proximate neighbors. We show that under standard assumptions (common trend and ignorability) a straightforward spatially explicit version of the benchmark difference-in-differences regression is capable of identifying both direct and indirect treatment effects. We demonstrate the finite sample performance of our spatial estimator via Monte Carlo simulations.

Suggested Citation

  • Delgado, Michael S. & Florax, Raymond J.G.M., 2015. "Difference-in-differences techniques for spatial data: Local autocorrelation and spatial interaction," Economics Letters, Elsevier, vol. 137(C), pages 123-126.
    • Handle: RePEc:eee:ecolet:v:137:y:2015:i:c:p:123-126
    DOI: 10.1016/j.econlet.2015.10.035
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    References listed on IDEAS

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    1. Charles F. Manski, 2013. "Identification of treatment response with social interactions," Econometrics Journal, Royal Economic Society, vol. 16(1), pages 1-23, February.
    2. Ashenfelter, Orley C, 1978. "Estimating the Effect of Training Programs on Earnings," The Review of Economics and Statistics, MIT Press, vol. 60(1), pages 47-57, February.
    3. Guido W. Imbens & Jeffrey M. Wooldridge, 2009. "Recent Developments in the Econometrics of Program Evaluation," Journal of Economic Literature, American Economic Association, vol. 47(1), pages 5-86, March.
    4. Ashenfelter, Orley & Card, David, 1985. "Using the Longitudinal Structure of Earnings to Estimate the Effect of Training Programs," The Review of Economics and Statistics, MIT Press, vol. 67(4), pages 648-660, November.
    5. Gilles Duranton & J. V. Henderson & William C. Strange (ed.), 2015. "Handbook of Regional and Urban Economics," Handbook of Regional and Urban Economics, Elsevier, edition 1, volume 5, number 5.
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    More about this item

    Keywords

    Difference-in-differences; Monte Carlo simulation; Program evaluation; Spatial autocorrelation; Spatial interaction;
    All these keywords.

    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • C53 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Forecasting and Prediction Models; Simulation Methods

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