American Economic Review· 2020Q1
Bartik Instruments: What, When, Why, and How
- 2,253citations
- Q1SCImago
- 2020year
Short summary
This paper clarifies the statistical assumptions and identification strategies behind the Bartik instrument, a common tool in empirical economics for estimating causal effects.
AI-generated from the title and abstract; the full text is not read.
Key points
- The Bartik instrument combines local industry shares and national industry growth rates.
- Its common use assumes a pooled exposure research design for identification.
- Identification relies on the exogeneity of local industry shares.
- The paper explains how the instrument weights different exposure designs.
- Guidance is provided on assessing the plausibility of Bartik instrument research designs.
AI-generated from the title and abstract; the full text is not read.
Abstract
The Bartik instrument is formed by interacting local industry shares and national industry growth rates. We show that the typical use of a Bartik instrument assumes a pooled exposure research design, where the shares measure differential exposure to common shocks, and identification is based on exogeneity of the shares. Next, we show how the Bartik instrument weights each of the exposure designs. Finally, we discuss how to assess the plausibility of the research design. We illustrate our results through two applications: estimating the elasticity of labor supply, and estimating the elasticity of substitution between immigrants and natives. (JEL C51, F14, J15, J22, L60, R23, R32)
The authors' abstract, as published at the source. American Economic Review, 2020 · DOI ↗
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Field: General Economics, Econometrics and Finance
General Economics, Econometrics and FinanceEconomics, Econometrics and Finance