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Two-Way Fixed Effects and Differences-in-Differences with Heterogeneous Treatment Effects: A Survey

Author

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  • Clément de Chaisemartin

    (ECON - Département d'économie (Sciences Po) - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique)

  • Xavier D’haultfœuille

    (CREST - Centre de Recherche en Économie et Statistique - ENSAI - Ecole Nationale de la Statistique et de l'Analyse de l'Information [Bruz] - X - École polytechnique - IP Paris - Institut Polytechnique de Paris - ENSAE Paris - École Nationale de la Statistique et de l'Administration Économique - CNRS - Centre National de la Recherche Scientifique)

Abstract

Summary Linear regressions with period and group fixed effects are widely used to estimate policie's effects: 26 of the 100 most cited papers published by the American Economic Review from 2015 to 2019 estimate such regressions. It has recently been shown that those regressions may produce misleading estimates if the policy's effect is heterogeneous between groups or over time, as is often the case. This survey reviews a fast-growing literature that documents this issue and that proposes alternative estimators robust to heterogeneous effects. We use those alternative estimators to revisit Wolfers (2006a).

Suggested Citation

  • Clément de Chaisemartin & Xavier D’haultfœuille, 2022. "Two-Way Fixed Effects and Differences-in-Differences with Heterogeneous Treatment Effects: A Survey," SciencePo Working papers Main hal-03873885, HAL.
    • Handle: RePEc:hal:spmain:hal-03873885
    DOI: 10.1093/ectj/utac017
    Note: View the original document on HAL open archive server: https://sciencespo.hal.science/hal-03873885
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    More about this item

    Keywords

    Two-way fixed effects regressions; Differences-in-differences; Parallel trends; Heterogeneous treatment effects; Panel data; Repeated-cross section data; Policy evaluation;
    All these keywords.

    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models

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