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Simple and complex difference-in-differences approach

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  • Kotyrlo, Elena

    (HSE University; Moscow, Russian Federation)

Abstract

The paper presents extensions of the popular difference-in-differences approach (DD) from 2×2 design on multiple time–period, multiple groups, fuzzy DD, non-staggered treatment and approaches to measure distributional treatment effect. The paper describes assumptions for consistent estimation of the treatment effect by two-way fixed effects model (TWFE) and presents the problem leading to inconsistent estimates justifying the application of alternative estimators. The paper briefly introduces methods developing DD for multiple-period multiple-group cases based on TWFE and alternative approaches. The proposed techniques allow treatment evaluation in the frame of DD when canonical TWFE leads to inconsistent estimates. Some approaches allow replacement of the well-known parallel trend assumption (PTA) for a conditional PTA or time randomisation. The paper refers to implementations of these methods in Stata and R. Simulation modelling demonstrates that the stated properties of the alternative estimators are not always reliable.

Suggested Citation

  • Kotyrlo, Elena, 2024. "Simple and complex difference-in-differences approach," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 73, pages 119-142.
    • Handle: RePEc:ris:apltrx:0494
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    References listed on IDEAS

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    More about this item

    Keywords

    difference-in-differences; parallel trend assumption; non-staggered treatment; fuzzy DD.;
    All these keywords.

    JEL classification:

    • C18 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Methodolical Issues: General
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • C87 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Econometric Software

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