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Causal Mediation in Panel Data – Estimation Based on Difference in Differences

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  • Holm, Anders
  • Breen, Richard

Abstract

We propose a novel way of estimating direct and indirect causal effects for panel data. Our method applies when the treatment and the mediator can be coded as binary variables. We exploit pre-treatment and pre-mediator differences in outcomes between the mediated and non-mediated groups within the treated units. Our method is applicable when the mediator is realized both before and after treatment or when it is only a consequence of the treatment. We apply our method to the New Jersey minimum wage policy data and show that a minimal effect on overall employment is mediated through part-time employment.

Suggested Citation

  • Holm, Anders & Breen, Richard, 2023. "Causal Mediation in Panel Data – Estimation Based on Difference in Differences," SocArXiv kwscz, Center for Open Science.
    • Handle: RePEc:osf:socarx:kwscz
    DOI: 10.31219/osf.io/kwscz
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    References listed on IDEAS

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    1. Card, David & Krueger, Alan B, 1994. "Minimum Wages and Employment: A Case Study of the Fast-Food Industry in New Jersey and Pennsylvania," American Economic Review, American Economic Association, vol. 84(4), pages 772-793, September.
    2. Imai, Kosuke & Keele, Luke & Tingley, Dustin & Yamamoto, Teppei, 2011. "Unpacking the Black Box of Causality: Learning about Causal Mechanisms from Experimental and Observational Studies," American Political Science Review, Cambridge University Press, vol. 105(4), pages 765-789, November.
    3. Eva Deuchert & Martin Huber & Mark Schelker, 2019. "Direct and Indirect Effects Based on Difference-in-Differences With an Application to Political Preferences Following the Vietnam Draft Lottery," Journal of Business & Economic Statistics, Taylor & Francis Journals, vol. 37(4), pages 710-720, October.
    4. Arindrajit Dube & T. William Lester & Michael Reich, 2010. "Minimum Wage Effects Across State Borders: Estimates Using Contiguous Counties," The Review of Economics and Statistics, MIT Press, vol. 92(4), pages 945-964, November.
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