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Treatment-effect identification without parallel paths: An illustration in the case of Objective 1-Hainaut/Belgium, 1994-2006

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  • Vandenberghe, Vincent

Abstract

Imagine an impoverished region that becomes eligible for a generous transfer programme (the treatment). Imagine difference-in-differences analysis (DiD)-a before-and-after comparison of the income-level handicap-shows that the handicap has risen. Most observers would conclude to the policy's inefficiency. The point made in this paper is that second thoughts are needed, because DiD rests heavily on the validity of a key assumption: parallel paths in the absence of treatment. What is more, when several pre-treatment periods are available in the data, it can easily be assessed and, if necessary, abandoned in favour of more relevant ones.

Suggested Citation

  • Vandenberghe, Vincent, 2017. "Treatment-effect identification without parallel paths: An illustration in the case of Objective 1-Hainaut/Belgium, 1994-2006," Economics Discussion Papers 2017-23, Kiel Institute for the World Economy (IfW).
  • Handle: RePEc:zbw:ifwedp:201723
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    References listed on IDEAS

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    1. Romer, Paul M, 1986. "Increasing Returns and Long-run Growth," Journal of Political Economy, University of Chicago Press, vol. 94(5), pages 1002-1037, October.
    2. Robert M. Solow, 1956. "A Contribution to the Theory of Economic Growth," The Quarterly Journal of Economics, Oxford University Press, vol. 70(1), pages 65-94.
    3. Andres RodrIguez-Pose & Ugo Fratesi†, 2004. "Between Development and Social Policies: The Impact of European Structural Funds in Objective 1 Regions," Regional Studies, Taylor & Francis Journals, vol. 38(1), pages 97-113.
    4. Reggio, Iliana & Mora, Ricardo, 2012. "Treatment effect identification using alternative parallel assumptions," UC3M Working papers. Economics we1233, Universidad Carlos III de Madrid. Departamento de Economía.
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    Cited by:

    1. Vincent Vandenberghe, 2018. "Alternatives to Polynomial Trend-Corrected Differences-In-Differences Models," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2018001, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).

    More about this item

    Keywords

    treatment-effect analysis; difference-in-differences models; EU convergence policy;

    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • R15 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Econometric and Input-Output Models; Other Methods
    • O52 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Europe

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