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 September 2018
NBER Program(s):International Trade and Investment, Labor Studies

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. We recommend that practitioners 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.

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Document Object Identifier (DOI): 10.3386/w24997

 
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