Quasi-experimental Shift-share Designs

Citation:

Borusyak K, Hull P, Jaravel X. Quasi-experimental Shift-share Designs. [Internet]. Working Paper.

Abstract:

 

Many empirical studies leverage shift-share (or “Bartik”) instruments that combine a set of aggregate shocks with measures of shock exposure. We derive a necessary and sufficient shock-level orthogonality condition for these instruments to identify causal effects. We then show that orthogonality holds when observed shocks are as-good-as-randomly assigned and growing in number, with the average shock exposure sufficiently dispersed. Lastly, we show how to implement quasi-experimental shift-share designs with new shock-level regressions, which help visualize identifying shock variation, correct standard errors, choose appropriate specifications, test identifying assumptions, and optimally combine multiple sets of quasi-random shocks. We illustrate these points by revisiting Autor et al. (2013)'s analysis of the labor market effects of Chinese import competition.

Stata command: ssaggregate
Replication archive: https://github.com/borusyak/shift-share
Revision requested from the Review of Economic Studies.
NBER Working Paper 24997

ArXiv version

Full Text

Revision requested from the Review of Economic Studies. NBER Working Paper 24997
Last updated on 03/03/2019