Simple Diagnostics for Two-Way Fixed Effects
General Economics
2021-03-25 v1 Economics
Abstract
Difference-in-differences estimation is a widely used method of program evaluation. When treatment is implemented in different places at different times, researchers often use two-way fixed effects to control for location-specific and period-specific shocks. Such estimates can be severely biased when treatment effects change over time within treated units. I review the sources of this bias and propose several simple diagnostics for assessing its likely severity. I illustrate these tools through a case study of free primary education in Sub-Saharan Africa.
Cite
@article{arxiv.2103.13229,
title = {Simple Diagnostics for Two-Way Fixed Effects},
author = {Pamela Jakiela},
journal= {arXiv preprint arXiv:2103.13229},
year = {2021}
}