Bartik Instruments: An Applied Introduction
Journal of Financial Reporting, forthcoming
44 Pages Posted: 18 Feb 2021 Last revised: 13 Aug 2023
Date Written: February 15, 2021
Abstract
This article provides an applied introduction to Bartik instruments. The instruments attempt to reduce familiar endogeneity concerns in differential exposure designs (e.g., panel regressions with unit and time fixed effects). They isolate treatment variation due to the differential impact of common shocks on units with distinct pre-determined exposures. As a result, the instruments purge the treatment variation of possibly confounding factors varying across units over time. Given their broad applicability, Bartik instruments promise to provide researchers with a versatile new tool in their empirical toolbox to investigate relevant accounting questions.
Keywords: Bartik Instruments, Shift Shares, Simulated Instruments
JEL Classification: C51, M40
Suggested Citation: Suggested Citation