Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/265945 
Year of Publication: 
2022
Series/Report no.: 
CESifo Working Paper No. 9910
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
One of the perceived advantages of difference-in-differences (DiD) methods is that they do not explicitly restrict how units select into treatment. However, when justifying DiD, researchers often argue that the treatment is "quasi-randomly" assigned. We investigate what selection mechanisms are compatible with the parallel trends assumptions underlying DiD. We derive necessary and sufficient conditions for parallel trends that clarify whether and how selection can depend on time-invariant and time-varying unobservables. We also suggest a menu of interpretable primitive sufficient conditions for parallel trends, thereby providing the formal underpinnings for justifying DiD based on contextual information about selection into treatment. We provide results for both separable and nonseparable outcome models and show that this distinction has implications for the use of covariates in DiD analyses. Building on our analysis of nonseparable models, we connect DiD to the literature on nonparametric identification in panel models.
Subjects: 
causal inference
conditional parallal trends
covariates
difference-in-differences
selection mechanism
time-invariant and time-varying unobservables
treatment effects
JEL: 
C21
C23
Document Type: 
Working Paper
Appears in Collections:

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.