Dif-in-dif estimators of multiplicative treatment effects

Emanuele Ciani () and Paul Fisher

No 985, Temi di discussione (Economic working papers) from Bank of Italy, Economic Research and International Relations Area

Abstract: We consider a difference-in-differences setting with a continuous outcome, such as wages or expenditure. The standard practice is to take the logarithm of the outcome and then interpret the results as an approximation of the multiplicative treatment effect on the original outcome. We argue that a researcher should instead focus on the original outcome when discussing causal inference. Furthermore, it is preferable to use a non-linear estimator, because running OLS on the log-linearised model might confound distributional and mean changes. We illustrate the argument with an original empirical analysis of the impact of the UK Educational Maintenance Allowance on households' expenditure, and with a simulation exercise.

Keywords: difference-in-differences; log-linearisation; Poisson Pseudo Maximum Likelihood (search for similar items in EconPapers)
JEL-codes: C21 C51 I38 (search for similar items in EconPapers)
Date: 2014-10
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Citations: View citations in EconPapers (5)

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Related works:
Journal Article: Dif-in-Dif Estimators of Multiplicative Treatment Effects (2019)
Working Paper: Dif-in-dif estimators of multiplicative treatment effects (2014)
Working Paper: Dif-in-dif estimators of multiplicative treatment effects (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:bdi:wptemi:td_985_14

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