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 August 2020
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 shift-share instrumental variable (SSIV) regressions in which identification follows from the quasi-random assignment of shocks, while exposure shares are allowed to be endogenous. The framework is motivated by an equivalence result: the orthogonality between a shift-share instrument and an unobserved residual can be represented as the orthogonality between the underlying shocks and a shock-level unobservable. SSIV regression coefficients can similarly be obtained from an equivalent shock-level regression, motivating shock-level conditions for their consistency. We discuss and illustrate several practical insights delivered by this framework in the setting of Autor et al. (2013).

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Document Object Identifier (DOI): 10.3386/w24997

 
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