Research

Peer-Reviewed Publications

Quasi-Experimental Shift-Share Research Designs (with Peter Hull and Xavier Jaravel)

Review of Economic Studies, 89(1), 2022, p. 181-213

Key takeaways:

    • When using shift-share IVs, one has to take an a priori stand whether shares or shocks are exogenous.

    • We propose a formal framework for the exogenous shocks view.

    • This approach has practical implications for choosing controls (especially when shares do not add up to one), computing standard errors, running balance tests, etc.

    • Our Stata command recasts the shift-share IV regression as an equivalent IV regression at the level of exogenous shocks, helping to get correct SE, F-stats, and tests.

Twitter thread | Slides on shift-share IV methods broadly

Stata command: ssaggregate, available from ssc
R command: ssaggregate (by Kyle F. Butts)

Replication archive: https://github.com/borusyak/shift-share

Working Papers

Non-Random Exposure to Exogenous Shocks (updated Dec 2021, with Peter Hull)

Revisions requested (2nd round) from Econometrica

Access the longer working paper version here for the appendices covering various extensions (titled "Non-Random Exposure to Exogenous Shocks: Theory and Applications", updated Dec 2021)

Video recording from the online Chamberlain seminar | Twitter thread

Key takeaways:

    • Read the paper if your treatment or instrument is computed by a formula from multiple sources of variations, only some of which (the "shocks") are as-good-as-random

    • We show how to leverage the underlying true or natural experiment, purging OVB from non-random exposure to the shocks, while not imposing further assumptions (like parallel trends) that conventional approaches often require

    • The key requirement is to be explicit about what the natural experiment is: if some shocks exogenously happened, which alternative vectors of shocks could have happened instead, equally likely?

    • We give many suggestions how shock counterfactuals may be specified, and illustrate the ideas in applications.

    • The procedure yields corrected standard errors (via randomization inference)

NBER Working Paper 27845: https://www.nber.org/papers/w27845

Stata commands for randomization-based tests and confidence intervals are available by request.


Key takeaways:

    • All income and education groups in the U.S. have very similar % of expenditure on imports, overall or with specific trade partners.

    • Therefore they gain equal purchasing power from small trade shocks , in contrast to a common view that the poor benefit more.

    • Note: The labor market effects of trade shocks are now in a separate manuscript, "Are Trade Wars Class Wars? The Importance of Trade-Induced Horizontal Inequality")

NBER Working Paper 28957: https://www.nber.org/papers/w28957

Media coverage: New York Times (2018), New York Times (2019), Deutsche Welle, Les Echos

Twitter thread | Our older 2018 draft

Revisiting Event Study Designs: Robust and Efficient Estimation (with Xavier Jaravel and Jann Spiess, April 2022, Revisions requested from Review of Economic Studies)

Stata commands available via ssc install or from the Github archive:

  • did_imputation (implements the robust and efficient imputation estimator)

  • event_plot (makes event study plots for our estimator, alternative robust estimators, and conventional OLS)

A basic R command is available from Kyle Butts here.

Twitter thread | Presentation video

This new draft supersedes the 2017 version with Xavier Jaravel.

[Presentation video (45 min)]

Regressions of local population changes on local labor demand shocks may reveal little about the effects of observed or counterfactual shocks.

Key takeaways:

    • Welfare effects of trade shocks are linked to the labor market and consumption exposures of agents

    • On the labor market side, exposure to trade and therefore the welfare effects of trade shocks vary within, but not across, groups of U.S. workers with similar earnings.

    • Trade can generate winners and losers but not have substantial effects on the shape of the income distribution

This paper supersedes one part of our draft "The Distributional Effects of Trade: Theory and Evidence from the United States", which concerns the labor market effects of trade in general equilibrium.

(Based on the material previously included in our working paper "Non-Random Exposure to Exogenous Shocks: Theory and Applications")

Work in Progress

Projections on Observables in Two-Way Fixed Effect Models with Limited Mobility (with Martin Weidner)