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)
Bartik Instruments: What, When, Why, and How
Paul Goldsmith-Pinkham,Isaac Sorkin,Henry Swift
Published 2020 in The American Economic Review
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- Publication year
2020
- Venue
The American Economic Review
- Publication date
2020-08-01
- Fields of study
Economics
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