2024/04/01 by Stéphane Bonhomme, Bonhomme, Stephane, Angela Denis +1 · 1 citation
Economics, Econometrics and Finance · #Econometrics (econ.EM) #Economic Policies and Impacts #FOS: Economics and business #Global trade and economics #Labor market dynamics and wage inequality
paper · pdf · doi:10.48550/arxiv.2404.01495
openalex publication_date 2024/04/01 · openalex created_date 2025/10/10 · openalex updated_date 2026/07/28
A growing number of applications involve settings where, in order to infer heterogeneous effects, a researcher compares various units. Examples of research designs include children moving between different neighborhoods, workers moving between firms, patients migrating from one city to another, and banks offering loans to different firms. We present a unified framework for these settings, based on a linear model with normal random coefficients and normal errors. Using the model, we discuss how to recover the mean and dispersion of effects, other features of their distribution, and to construct predictors of the effects. We provide moment conditions on the model's parameters, and outline various estimation strategies. A main objective of the paper is to clarify some of the underlying assumptions by highlighting their economic content, and to discuss and inform some of the key practical choices.