IDEAS home Printed from
MyIDEAS: Log in (now much improved!) to save this paper

Randomization Inference for Difference-in-Differences with Few Treated Clusters

Listed author(s):
  • James G. MacKinnon


    (Queen's University)

  • Matthew D. Webb


    (Carleton University)

Inference using difference-in-differences with clustered data requires care. Previous research has shown that, when there are few treated clusters, t tests based on a cluster-robust variance estimator (CRVE) severely over-reject, different variants of the wild cluster bootstrap can over-reject or under-reject dramatically, and procedures based on randomization inference show promise. We demonstrate that randomization inference (RI) procedures based on estimated coefficients, such as the one proposed by Conley and Taber (2011), fail whenever the treated clusters are atypical. We propose an RI procedure based on t statistics which fails only when the treated clusters are atypical and few in number. We also propose a bootstrap-based alternative to randomization inference, which mitigates the discrete nature of RI P values when the number of clusters is small. Two empirical examples demonstrate that alternative procedures can yield dramatically different inferences.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL:
File Function: First version 2016
Download Restriction: no

Paper provided by Queen's University, Department of Economics in its series Working Papers with number 1355.

in new window

Length: 26 pages
Date of creation: Jun 2016
Handle: RePEc:qed:wpaper:1355
Contact details of provider: Postal:
Kingston, Ontario, K7L 3N6

Phone: (613) 533-2250
Fax: (613) 533-6668
Web page:

More information through EDIRC

No references listed on IDEAS
You can help add them by filling out this form.

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:qed:wpaper:1355. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mark Babcock)

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 references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link 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 profile, as there may be some citations waiting for confirmation.

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

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.