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Damian Clarke, PhD student U. of Oxford, Centre for the Study of African Economies

Estimating Difference-in-Differences in the Presence of Spillovers: Theory and Application to Contraceptive Reforms in Latin America

12 Agosto 2015 - / 15:30

Sala 112, Facultad de Ciencias Económicas y Administrativas UC

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Abstract: I propose a method for difference-in-differences (DD) estimation in situations where the stable unit treatment value assumption is violated locally. This is relevant for a wide variety of cases where spillovers may occur between quasi-treatment and quasi-control areas in a (natural) experiment. A flexible methodology is described to test for such spillovers, and to consistently estimate treatment effects in their presence. This methodology is illustrated using two recent examples of contraceptive reform. It is shown that with both the arrival of abortion to Mexico DF, as well as the arrival of the emergency contraceptive pill to certain areas of Chile, reductions in teenage pregnancy occurred in both reform neighbourhoods as well as nearby (but theoretically untreated) neighbourhoods. Where reforms are geographically disperse, I demonstrate that spillovers can cause considerable concern regarding the unbiasedness of the traditional DD estimates widely employed in the economic literature. Applying this methodology provides considerable insight into the estimation of the impact of contraceptive reform on teenage pregancy: a topical and important policy issue for governments in Latin America.