Dif-in-dif estimators of multiplicative treatment effects

Paul Fisher and Emanuele Ciani ()

No 2014-14, ISER Working Paper Series from Institute for Social and Economic Research

Abstract: We consider a difference-in-differences setting with a continuous outcome, such as wages or expenditure. The standard practice is to take its logarithm and then interpret the results as an approximation of the multiplicative treat- ment effect on the original outcome. We argue that a researcher should rather focus on the non-transformed outcome when discussing causal inference. Fur- thermore, it is preferable to use a non-linear estimator, because running OLS on the log-linearised model might confound distributional and mean changes. We illustrate the argument with an original empirical analysis of the impact of the UK Educational Maintenance Allowance on households’ expenditure, and with a simulation exercise.

Date: 2014-03-13
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Related works:
Journal Article: Dif-in-Dif Estimators of Multiplicative Treatment Effects (2019)
Working Paper: Dif-in-dif estimators of multiplicative treatment effects (2014)
Working Paper: Dif-in-dif estimators of multiplicative treatment effects (2013)
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