Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/95673
Authors: 
Ciani, Emanuele
Fisher, Paul
Year of Publication: 
2014
Series/Report no.: 
ISER Working Paper Series 2014-14
Abstract: 
We consider a difference-in-differences setting with a continuous outcome, such as wages or expenditure. The standard practice is to take its logarithm and then interpret the results as an approximation of the multiplicative treat- ment effect on the original outcome. We argue that a researcher should rather focus on the non-transformed outcome when discussing causal inference. Fur- thermore, it is preferable to use a non-linear estimator, because running OLS on the log-linearised model might confound distributional and mean changes. We illustrate the argument with an original empirical analysis of the impact of the UK Educational Maintenance Allowance on households expenditure, and with a simulation exercise.
Subjects: 
difference-in-differences
log-linearisation
Poisson Pseudo Maximum Likelihood
JEL: 
C21
C51
I38
Document Type: 
Working Paper

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