SMU SOE Seminar (November 3, 2023): Difference in Differences with Latent Group Structures

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ABSTRACT This paper investigates the estimation of average treatment effects on the treated(ATT) from the panel data in the presence of latent group structures, where potential outcome distributions depend on latent types. We examine a scenario where the parallel trends assumption holds when conditioned on latent types, but may not be maintained in aggregate, resulting in an inconsistent standard difference-in-difference estimator. We demonstrate that the latent group-specific ATT (LGATT) can be identified if parallel trend assumptions and other regularity conditions are met for latent types. We present the conditions under which latent group structures are identified from the pre-treatment period data. We propose an estimator for the LGATT that minimizes a weighted least squares criterion function, using weights derived from the estimated posterior probabilities of each latent type using pre-treatment data. Click here to view the CV. Click here to view the paper.
		PRESENTER Hiroyuki Kasahara The University of British Columbia
		RESEARCH FIELDS Econometrics International Trade Macroeconomics
		DATE: 3 November 2023 (Thursday)
		TIME: 4pm - 5.30pm
		VENUE: Meeting Room 5.1, Level 5 School of Economics Singapore Management University 90 Stamford Road Singapore 178903