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Difference-in-Differences with a Misclassified Treatment

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  • Akanksha Negi

    (Monash University)

  • Digvijay S. Negi

    (Ashoka University)

Abstract

This paper studies identification and estimation of the average treatment effect of a latent treated subpopulation in difference-in-difference designs when the observed treatment is differentially (or endogenously) mismeasured for the truth. Common examples include misreporting and mistargeting. We propose a twostep estimator which corrects for the empirically common phenomenon of onesided misclassification in the treatment status. The solution uses a single exclusion restriction embedded in a partial observability probit to point-identify the latent parameter. We demonstrate the method by revisiting two large-scale national programs in India; one where pension benefits are under-reported and second where the program is mistargeted.

Suggested Citation

  • Akanksha Negi & Digvijay S. Negi, 2024. "Difference-in-Differences with a Misclassified Treatment," Working Papers 121, Ashoka University, Department of Economics.
    • Handle: RePEc:ash:wpaper:121
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