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Direct and Indirect Effects Based on Difference-in-Differences With an Application to Political Preferences Following the Vietnam Draft Lottery

  • Deuchert, Eva Department of Economics, University of Fribourg, Fribourg, Switzerland
  • Huber, Martin Department of Economics, University of Fribourg, Fribourg, Switzerland
  • Schelker, Mark Department of Economics, University of Fribourg, Fribourg, Switzerland
Published in:
  • Journal of Business and Economic Statistics. - 2019, vol. 37, no. 4, p. 710-720
English We propose a difference-in-differences approach for disentangling a total treatment effect within specific subpopulations into a direct effect and an indirect effect operating through a binary mediating variable. Random treatment assignment along with specific common trend and effect homogeneity assumptions identify the direct effects on the always and never takers, whose mediator is not affected by the treatment, as well as the direct and indirect effects on the compliers, whose mediator reacts to the treatment. In our empirical application, we analyze the impact of the Vietnam draft lottery on political preferences. The results suggest that a high draft risk due to the draft lottery outcome leads to an increase in mild preferences for the Republican Party, but has no effect on strong preferences for either party or on specific political attitudes. The increase in Republican support is mostly driven by the direct effect not operating through the mediator that is military service.
Faculté des sciences économiques et sociales et du management
Département d'économie politique
  • English
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