IDEAS home Printed from https://ideas.repec.org/p/arx/papers/2507.21915.html
   My bibliography  Save this paper

Nonlinear Treatment Effects in Shift-Share Designs

Author

Listed:
  • Luigi Garzon
  • Vitor Possebom

Abstract

We analyze heterogenous, nonlinear treatment effects in shift-share designs with exogenous shares. We employ a triangular model and correct for treatment endogeneity using a control function. Our tools identify four target parameters. Two of them capture the observable heterogeneity of treatment effects, while one summarizes this heterogeneity in a single measure. The last parameter analyzes counterfactual, policy-relevant treatment assignment mechanisms. We propose flexible parametric estimators for these parameters and apply them to reevaluate the impact of Chinese imports on U.S. manufacturing employment. Our results highlight substantial treatment effect heterogeneity, which is not captured by commonly used shift-share tools.

Suggested Citation

  • Luigi Garzon & Vitor Possebom, 2025. "Nonlinear Treatment Effects in Shift-Share Designs," Papers 2507.21915, arXiv.org, revised Nov 2025.
    • Handle: RePEc:arx:papers:2507.21915
    as

    Download full text from publisher

    File URL: http://arxiv.org/pdf/2507.21915
    File Function: Latest version
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Andrew Chesher, 2003. "Identification in Nonseparable Models," Econometrica, Econometric Society, vol. 71(5), pages 1405-1441, September.
    2. Luis Antonio Fantozzi Alvarez & Rodrigo Toneto, 2024. "The interpretation of 2SLS with a continuous instrument: a weighted LATE representation," Working Papers, Department of Economics 2024_11, University of São Paulo (FEA-USP).
    3. James J. Heckman & Sergio Urzua & Edward Vytlacil, 2006. "Understanding Instrumental Variables in Models with Essential Heterogeneity," The Review of Economics and Statistics, MIT Press, vol. 88(3), pages 389-432, August.
    4. Costa, Francisco & Garred, Jason & Pessoa, João Paulo, 2016. "Winners and losers from a commodities-for-manufactures trade boom," Journal of International Economics, Elsevier, vol. 102(C), pages 50-69.
    5. Guido W. Imbens & Whitney K. Newey, 2009. "Identification and Estimation of Triangular Simultaneous Equations Models Without Additivity," Econometrica, Econometric Society, vol. 77(5), pages 1481-1512, September.
    6. David H. Autor & David Dorn & Gordon H. Hanson, 2013. "The China Syndrome: Local Labor Market Effects of Import Competition in the United States," American Economic Review, American Economic Association, vol. 103(6), pages 2121-2168, October.
    7. Clément de Chaisemartin & Ziteng Lei, 2022. "Are Bartik Regressions Always Robust to Heterogeneous Treatment Effects?," SciencePo Working papers Main hal-03873913, HAL.
    8. Jinyong Hahn & Guido Kuersteiner & Andres Santos & Wavid Willigrod, 2024. "Overidentification in Shift-Share Designs," Papers 2404.17049, arXiv.org.
    9. Victor Chernozhukov & Iván Fernández‐Val & Whitney Newey & Sami Stouli & Francis Vella, 2020. "Semiparametric estimation of structural functions in nonseparable triangular models," Quantitative Economics, Econometric Society, vol. 11(2), pages 503-533, May.
    10. Paul Goldsmith-Pinkham & Isaac Sorkin & Henry Swift, 2020. "Bartik Instruments: What, When, Why, and How," American Economic Review, American Economic Association, vol. 110(8), pages 2586-2624, August.
    11. Joseph G. Altonji & Rosa L. Matzkin, 2005. "Cross Section and Panel Data Estimators for Nonseparable Models with Endogenous Regressors," Econometrica, Econometric Society, vol. 73(4), pages 1053-1102, July.
    12. Richard Blundell & Rosa L. Matzkin, 2014. "Control functions in nonseparable simultaneous equations models," Quantitative Economics, Econometric Society, vol. 5, pages 271-295, July.
    13. Daron Acemoglu & Pascual Restrepo, 2020. "Robots and Jobs: Evidence from US Labor Markets," Journal of Political Economy, University of Chicago Press, vol. 128(6), pages 2188-2244.
    14. Luis Alvarez & Bruno Ferman & Raoni Oliveira, 2022. "Randomization Inference Tests for Shift-Share Designs," Papers 2206.00999, arXiv.org.
    15. Timothy J. Bartik, 1991. "Who Benefits from State and Local Economic Development Policies?," Books from Upjohn Press, W.E. Upjohn Institute for Employment Research, number wbsle.
    16. Christine Blandhol & John Bonney & Magne Mogstad & Alexander Torgovitsky, 2022. "When is TSLS Actually LATE?," NBER Working Papers 29709, National Bureau of Economic Research, Inc.
    17. Rodrigo Adão & Michal Kolesár & Eduardo Morales, 2019. "Shift-Share Designs: Theory and Inference," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 134(4), pages 1949-2010.
    18. Rodrigo Ad~ao & Michal Koles'ar & Eduardo Morales, 2018. "Shift-Share Designs: Theory and Inference," Papers 1806.07928, arXiv.org, revised Aug 2019.
    19. Alvarez, Luis A.F. & Toneto, Rodrigo, 2024. "The interpretation of 2SLS with a continuous instrument: A weighted LATE representation," Economics Letters, Elsevier, vol. 237(C).
    20. repec:osf:socarx:vjae6_v1 is not listed on IDEAS
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Mogstad, Magne & Torgovitsky, Alexander, 2024. "Instrumental variables with unobserved heterogeneity in treatment effects," Handbook of Labor Economics,, Elsevier.
    2. César, Andrés & Falcone, Guillermo & Gasparini, Leonardo, 2021. "Costs and benefits of trade shocks: Evidence from Chilean local labor markets," Labour Economics, Elsevier, vol. 73(C).
    3. Stemmler, Henry, 2023. "Automated Deindustrialization: How Global Robotization Affects Emerging Economies—Evidence from Brazil," World Development, Elsevier, vol. 171(C).
    4. Fang, Guanfu & Miao, Liya, 2025. "Robot and crime: Evidence from China," World Development, Elsevier, vol. 188(C).
    5. Bekhtiar, Karim, 2025. "The decline of manufacturing employment and the rise of the far-right in Austria," Journal of Public Economics, Elsevier, vol. 242(C).
    6. Nir Billfeld & Moshe Kim, 2024. "Context-dependent Causality (the Non-Nonotonic Case)," Papers 2404.05021, arXiv.org.
    7. Sheida Teimouri & Joachim Zietz, 2025. "Housing prices and import competition," Empirical Economics, Springer, vol. 68(1), pages 253-280, January.
    8. Allen IV, James, 2024. "Double-booked: Effects of overlap between school and farming calendars on education and child labor," IFPRI discussion papers 2235, International Food Policy Research Institute (IFPRI).
    9. Ben Zeev, Nadav & Nathan, Daniel, 2024. "The widening of cross-currency basis: When increased FX swap demand meets limits of arbitrage," Journal of International Economics, Elsevier, vol. 152(C).
    10. Brey, Björn, 2024. "The effect of recent technological change on US immigration policy," Journal of Economic Behavior & Organization, Elsevier, vol. 227(C).
    11. Curuk, Malik & Rozendaal, Rik & Wendler, Tobias, 2025. "Gender differences in the employment effects of climate policy," Energy Economics, Elsevier, vol. 145(C).
    12. Yu, Jisang & Villoria, Nelson B. & Hendricks, Nathan P., 2022. "The incidence of foreign market tariffs on farmland rental rates," Food Policy, Elsevier, vol. 112(C).
    13. Elliott Ash & Massimo Morelli & Matia Vannoni, 2022. "More Laws, More Growth? Evidence from U.S. States," BAFFI CAREFIN Working Papers 22178, BAFFI CAREFIN, Centre for Applied Research on International Markets Banking Finance and Regulation, Universita' Bocconi, Milano, Italy.
    14. Allen IV, James, 2024. "Double-booked: Effects of overlap between school and farming calendars on education and child labor," IFPRI discussion papers 2235, International Food Policy Research Institute (IFPRI).
    15. Nadav Ben Zeev & Daniel Nathan, 2023. "The Persistent Widening of Cross-Currency Basis: When Increased FX Swap Demand Meets Limits of Arbitrage," Working Papers 2316, Ben-Gurion University of the Negev, Department of Economics.
    16. Sofía Fernández Guerrico, 2023. "Trade Shocks, Population Growth, and Migration," ULB Institutional Repository 2013/357236, ULB -- Universite Libre de Bruxelles.
    17. Komarek, Timothy M. & Butts, Kyle & Wagner, Gary A., 2022. "Government Contracting, Labor Intensity, and the Local Effects of Fiscal Consolidation: Evidence from the Budget Control Act of 2011," Journal of Urban Economics, Elsevier, vol. 132(C).
    18. Mattia Filomena & Matteo Picchio & Alessia Lo Turco, 2024. "Trade exposure, immigrants and workplace injuries," Working Papers 488, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.
    19. Luo, Wei & Tang, Lixin & Yang, Yaxin & Zou, Xianqiang, 2025. "Robots as guardians: Industrial automation and workplace safety in China," Journal of Development Economics, Elsevier, vol. 172(C).
    20. Galle, Simon & Lorentzen, Linnea, 2024. "The unequal effects of trade and automation across local labor markets," Journal of International Economics, Elsevier, vol. 150(C).

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:arx:papers:2507.21915. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: arXiv administrators (email available below). General contact details of provider: http://arxiv.org/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.