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arXiv · 2401.12309

Interpreting Event-Studies from Recent Difference-in-Differences Methods

Jonathan Roth
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Abstract

This note discusses the interpretation of event-study plots produced by recent difference-in-differences methods. I show that even when specialized to the case of non-staggered treatment timing, the default plots produced by software for several of the most popular recent methods do not match those of traditional two-way fixed effects (TWFE) event-studies. The plots produced by the new methods may show a kink or jump at the time of treatment even when the TWFE event-study shows a straight line. This difference stems from the fact that the new methods construct the pre-treatment coefficients asymmetrically from the post-treatment coefficients. As a result, visual heuristics for evaluating violations of parallel trends using TWFE event-study plots should not be immediately applied to those from these methods. I conclude with practical recommendations for constructing and interpreting event-study plots when using these methods.

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Jonathan Roth. 2024-01-22. Interpreting Event-Studies from Recent Difference-in-Differences Methods. https://arxiv.org/abs/2401.12309

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