NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH
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Quasi-Experimental Shift-Share Research Designs

Kirill Borusyak, Peter Hull, Xavier Jaravel

NBER Working Paper No. 24997
Issued in September 2018, Revised in December 2019
NBER Program(s):International Trade and Investment, Labor Studies

Many studies use shift-share (or “Bartik”) instruments, which average a set of shocks with exposure share weights. We provide a new econometric framework for such designs in which identification follows from the quasi-random assignment of shocks, allowing exposure shares to be endogenous. This framework is centered around a numerical equivalence: conventional shift-share instrumental variable (SSIV) regression coefficients are equivalently obtained from a transformed regression where the shocks are used directly as an instrument. This equivalence implies a shock-level translation of the SSIV exclusion restriction, which holds when shocks are as-good-as-randomly assigned and large in number, with sufficient dispersion in their average exposure. We discuss and illustrate several practical insights delivered by this framework.

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Document Object Identifier (DOI): 10.3386/w24997

 
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