2024/05/20 by Sho Miyaji, Miyaji, Sho
Mathematics · Social Sciences · #Advanced Causal Inference Techniques #Econometrics (econ.EM) #FOS: Economics and business #Intergenerational and Educational Inequality Studies #School Choice and Performance
paper · pdf · doi:10.48550/arxiv.2405.12083
openalex publication_date 2024/05/20 · openalex created_date 2025/10/10 · openalex updated_date 2026/07/28
Many studies exploit variation in the timing of policy adoption across units as an instrument for treatment. This paper formalizes the underlying identification strategy as an instrumented difference-in-differences (DID-IV). In this design, a Wald-DID estimand, which scales the DID estimand of the outcome by the DID estimand of the treatment, captures the local average treatment effect on the treated (LATET). We extend the canonical DID-IV design to multiple period settings with the staggered adoption of the instrument across units. Moreover, we propose a credible estimation method in this design that is robust to treatment effect heterogeneity. We illustrate the empirical relevance of our findings, estimating returns to schooling in the United Kingdom. In this application, the two-way fixed effects instrumental variable regression, the conventional approach to implement DID-IV designs, yields a negative estimate. By contrast, our estimation method indicates a substantial gain from schooling.