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Difference-in-Differences with Variation in Treatment Timing

Author

Listed:
  • Andrew Goodman-Bacon

Abstract

The canonical difference-in-differences (DD) model contains two time periods, “pre” and “post”, and two groups, “treatment” and “control”. Most DD applications, however, exploit variation across groups of units that receive treatment at different times. This paper derives an expression for this general DD estimator, and shows that it is a weighted average of all possible two-group/two-period DD estimators in the data. This result provides detailed guidance about how to use regression DD in practice. I define the DD estimand and show how it averages treatment effect heterogeneity and that it is biased when effects change over time. I propose a new balance test derived from a unified definition of common trends. I show how to decompose the difference between two specifications, and I apply it to models that drop untreated units, weight, disaggregate time fixed effects, control for unit-specific time trends, or exploit a third difference.

Suggested Citation

  • Andrew Goodman-Bacon, 2018. "Difference-in-Differences with Variation in Treatment Timing," NBER Working Papers 25018, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:25018
    Note: CH DAE LS PE
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    More about this item

    JEL classification:

    • C1 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models

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