Primary Submission Category: Difference in Differences
Estimating Counterfactual Matrix Means with Short Panel Data
Authors: Brad Ross, Lihua Lei,
Presenting Author: Brad Ross*
We develop a more flexible approach for identifying and estimating average counterfactual outcomes when several but not all possible outcomes are observed for each unit in a large cross section. Such settings include event studies and studies of outcomes of “matches” between agents of two types, e.g. workers and firms or people and places. When outcomes are generated by a factor model that allows for low-dimensional unobserved confounders, our method yields consistent, asymptotically normal estimates of counterfactual outcome means under asymptotics that fix the number of outcomes as the cross section grows and general outcome missingness patterns, including those not accommodated by existing methods. Our method is also computationally efficient, requiring only a single eigendecomposition of a particular aggregation of any factor estimates constructed using subsets of units with the same observed outcomes. In a semi-synthetic simulation study based on matched employer-employee data, our method performs favorably compared to a Two-Way-Fixed-Effects-model-based estimator.
The paper draft can be found here: https://arxiv.org/abs/2312.07520