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Journal of Econometric Methods

Ed. by Giacomini, Raffaella / Li, Tong

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2156-6674
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Broken or Fixed Effects?

Charles E. Gibbons / Juan Carlos Suárez Serrato / Michael B. Urbancic
Published Online: 2018-02-03 | DOI: https://doi.org/10.1515/jem-2017-0002

Abstract

We replicate eight influential papers to provide empirical evidence that, in the presence of heterogeneous treatment effects, OLS with fixed effects (FE) is generally not a consistent estimator of the average treatment effect (ATE). We propose two alternative estimators that recover the ATE in the presence of group-specific heterogeneity. We document that heterogeneous treatment effects are common and the ATE is often statistically and economically different from the FE estimate. In all but one of our replications, there is statistically significant treatment effect heterogeneity and, in six, the ATEs are either economically or statistically different from the FE estimates.

This article offers supplementary material which is provided at the end of the article.

Keywords: average treatment effects; fixed effects models; heterogeneous treatment effects

JEL Classification: C21; C18; C52

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About the article

Published Online: 2018-02-03


Citation Information: Journal of Econometric Methods, 20170002, ISSN (Online) 2156-6674, DOI: https://doi.org/10.1515/jem-2017-0002.

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