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Difference-in-differences with variation in treatment timing
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DOI：10.1016/j.jeconom.2021.03.014.png)
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The canonical difference-in-differences (DD) estimator contains two time periods, pre and post, and two groups, treatment and control. Most DD applications, however, exploit variation across groups of units that receive treatment at different times. This paper shows that the two-way fixed effects estimator equals a weighted average of all possible two-group/two-period DD estimators in the data. A causal interpretation of twoway fixed effects DD estimates requires both a parallel trends assumption and treatment effects that are constant over time. I show how to decompose the difference between two specifications, and provide a new analysis of models that include time-varying controls. Published by Elsevier B.V.
Keyword:
Difference-in-differences
Variation in treatment timing
Two-way fixed effects
Treatment effect heterogeneity
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