Journal
JOURNAL OF ECONOMIC SURVEYS
Volume 36, Issue 1, Pages 214-234Publisher
WILEY
DOI: 10.1111/joes.12452
Keywords
direct effect; economics; indirect effect; mediation; policy evaluation; quasi-experimental designs
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Funding
- Raffaele D'addario Foundation
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This paper reviews methodological advancements in the literature on causal mediation in economics, specifically quasi-experimental designs, defining parameters of interest, main assumptions, and identification strategies under the counterfactual approach, and presenting Instrumental Variables (IV), Difference-in-Differences (DID), and Synthetic Control (SC) methods.
Mediation analysis aims at identifying and evaluating the mechanisms through which treatment affects an outcome. The goal is to disentangle the total treatment effect into two components: the indirect effect that occurs due to one or more intermediate variables, known as mediators, and the direct effect that captures all other possible explanations for why a treatment works. This paper reviews the methodological advancements in the literature on causal mediation in economics, specifically quasi-experimental designs. I define the parameters of interest, the main assumptions and the identification strategies under the counterfactual approach, and present the Instrumental Variables (IV), Difference-in-Differences (DID), and Synthetic Control (SC) methods.
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