Dear Profs and colleagues,
I'm conducting a study on the effect of cultural diversity on firm productivity in Portugal from 2010 to 2019. The main analysis uses OLS and IV approaches, but I'm considering adding a Difference-in-Differences (DiD) method to address a reviewer's concerns.
Current Methodology
Results So Far
To further address potential endogeneity, I'm considering a DiD approach:
Paris
I'm conducting a study on the effect of cultural diversity on firm productivity in Portugal from 2010 to 2019. The main analysis uses OLS and IV approaches, but I'm considering adding a Difference-in-Differences (DiD) method to address a reviewer's concerns.
Current Methodology
- OLS Regression
- Dependent variable: Firm productivity
- Key independent variable: Cultural diversity (Simpson index)
- Various controls for firm and worker characteristics
- Instrumental Variable (IV) Approach
- Instrument: Share of nationalities in Portuguese regions in 2000
- Rationale: Past settlement patterns predict current immigrant distribution but not current firm productivity
Results So Far
- OLS coefficient: -0.019
- 2SLS coefficient: -0.051
To further address potential endogeneity, I'm considering a DiD approach:
- Treatment group: Areas with high immigrant inflows (2010-2019)
- Control group: Areas with low immigrant inflows (2010-2019)
- Pre-treatment: 2000
- Post-treatment: 2019 Questions for the Community
- Is combining DiD with IV a suitable approach to strengthen my analysis?
- How can I best define "high" and "low" immigrant inflows for the DiD setup?
- Are there any potential pitfalls or challenges I should be aware of when implementing this combined approach?
- Do you think this additional analysis would significantly improve the paper's appeal to journals?
- Any insights, suggestions, or references to similar approaches in the literature would be greatly appreciated. Thank you in advance for your help!
Paris
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