Two-way Fixed Effects Model Research Articles

Place or patient as the driver of regional variation in healthcare spending – Discrepancies by category of care

We study how much regional variation in healthcare spending is driven by place- and patient-specific factors using a random sample of 53,620 regional migrants in Sweden. We find notable differences depending on the category of care, with place-specific factors having a significantly larger impact on specialized outpatient care compared to inpatient and pharmaceutical care. The place effect is estimated to 75% of variation in specialized outpatient care, but 26% or less in variations in inpatient care, and 5% in prescription drug spending. We also find that the empirical estimator has a substantial impact on the estimates of the place-specific effect. The results based on the traditional approach in the literature with two-way fixed effects and event-study models produce much larger estimates of the place-specific effect compared to results based on recently developed heterogeneity-robust models. For total healthcare spending, the traditional two-way fixed effects model estimates a place effect of 78%, while the heterogeneity-robust estimator finds a place effect around 10%. This finding indicates that previous results in this literature, all based on traditional two-way fixed-effects regressions, should be interpreted with care.

The Impact of Digital Economy on Green Technology Innovation and Its Mechanism: Evidence from 274 Cities in China

ABSTRACT The digital economy is gradually emerging as a new driving force and engine for high-quality economic development. In the context of reaching carbon peak and carbon neutrality, can the digital economy empower the development of urban green technology innovation? Based on the panel data of 274 cities in China from 2011 to 2019, this paper measures the development level of digital economy at the city level and employs the two-way fixed effect model to empirically analyze the impact of digital economy on urban green technology innovation. The results indicate that: (1) Digital economy development exert a significant positive impact on urban green technology innovation. This conclusion still holds after a series of robustness tests. (2) Digital economy enhances urban green technology innovation by optimizing human capital structure, enhancing the level of financial and credit investment, and strengthening public environmental concern. (3) Heterogeneity analyses show that the digital economy has a greater positive effect on green technology innovation in the eastern region and non-resource cities. The higher the level of intellectual property protection and the better the development of the factor market, and the lower the intensity of environmental regulation, the greater the positive effect of the digital economy on urban green technology innovation. These findings are not only of great practical significance for accelerating the development of green technology innovation in China, but also serve as a reference for other developing countries to utilize the digital economy to empower the development of green technology innovation.

Dose the increasing burden of social endowment affect sustainable development of economy?

The rapid increase in the number of older people under the background of population aging has gradually changed the disease spectrum of society, making aging diseases more prevalent, and increasing the demand for health care services, medical and health services, and health insurance among older people, ultimately leading to increasing household and social spending on old age. This study is conducted to assess the impact of those spending burden on the sustainable development of economy and find out some practical and effective solutions. This paper constructs a theoretical model to illustrate the relationship between the old-age dependency ratio and the marginal product of capital (MPK), and then establishes a two-way fixed effect model based on transnational panel data of 81 countries from 1981 to 2017 to verify this relationship empirically. This paper finds that, after controlling a series of variables, an increased burden of old-age dependency leads to a decline in the MPK, a key macroeconomic variable and also a sustainable development criteria, but in which health care, health security systems, and technological innovation play a key and moderating role. The conclusion is also valid after tackling the problem of endogeneity with different methods, like two-stage least squares (TSLS) and the generalized methods of moments (GMM). Overall, before population aging, countries that are old-but-not-rich should encourage more supply-side investments in public health system or technological innovation, and adjust retirement system, or gradually encourage childbearing to strive for time and space for later sustainable development of public health system and economy.

Study on the Impact of Digital Financial Inclusion on Low-Carbon Agricultural Development in Guizhou Province——Empirical analysis based on two-way fixed effects model and mediated effects model

Based on the agricultural carbon emissions of 88 counties in Guizhou Province and the digital financial inclusion index provided by the Digital Finance Research Center of Peking University from 2015 to 2022, this study analyzes the effect of the impact of digital financial inclusion on the low-carbon development of agriculture and the transmission paths by using the two-way fixed effect model and the mediated effect model. The influence mechanism test finds that digital inclusive finance has a significant inhibitory effect on the intensity of agricultural carbon emissions, which is proved by both the robustness test and the endogeneity test. Through the mediation effect model, it is found that digital inclusive finance can achieve agricultural carbon emission reduction by promoting agricultural technological progress, which can be expressed as digital inclusive finance promotes the low-carbon development of agriculture by improving the degree of agricultural mechanization.

Простой и сложный метод разности разностей

The paper presents extensions of the popular difference‐in‐differences approach (DD) from 2×2 design on multiple time‐period, multiple groups, fuzzy DD, non‐staggered treatment and approaches to measure distributional treatment effect. The paper describes assumptions for consistent estimation of the treatment effect by two‐way fixed effects model (TWFE) and presents the problem leading to inconsistent estimates justifying the application of alternative estimators. The paper briefly introduces methods developing DD for multiple‐period multiple‐group cases based on TWFE and alternative approaches. The proposed techniques allow treatment evaluation in the frame of DD when canonical TWFE leads to inconsistent estimates. Some approaches allow replacement of the well‐known parallel trend assumption (PTA) for a conditional PTA or time randomisation. The paper refers to implementations of these methods in Stata and R. Simulation modelling demonstrates that the stated properties of the alternative estimators are not always reliable.

Accumulation of production capital and income growth of Chinese farmers in the post-poverty alleviation era: A study based on a two-way fixed effects model with CFPS data.

Agricultural mechanization is a crucial indicator of modernization in agriculture. It improves productivity and underpins the evolution of a modern state. This study scrutinizes the enduring effects of government subsidies on farm machinery acquisition, income growth, and capital accumulation in rural households. It is based on policies about targeted poverty alleviation and rural revitalization. Research findings indicate that government subsidies have significantly increased the per capita net income of rural households. However, in the post-poverty alleviation era, for households that already possess agricultural machinery, the benefits brought by government subsidies in the early stages of the policy cycle tend to diminish over time. From 2016 to 2020, government subsidies continued to enhance the value of agricultural machinery in rural households. Their impact on ownership rates first slightly declined and then increased again. The promotional effect in 2020 was not significantly better than in 2016. When China is fighting against poverty, it is essential to encourage rural households to use their income and government subsidies to accumulate production capital. A long-term mechanism has been established to protect the achievements of poverty alleviation, promote agricultural mechanization and rural modernization, and support rural revitalization.

Senior executive characteristics: Impact on ESG practices and corporate valuation relationship.

In recent years, sustainable development and green growth and performance of companies in environmental, social, and corporate governance (ESG) has received widespread attention from all sectors of society. Based on panel data of A-share listed companies in China from 2009 to 2022, this study employs a two-way fixed effects model to explore the mechanism of the relationship between ESG practices and corporate value, as well as the moderating effect of executive characteristics within this relationship. The results indicate a robust positive relationship between ESG practices and corporate value. ‎However, this relationship is moderated by the academic backgrounds of senior ‎executives, who negatively influence it, and by male executives, who exert a positive ‎moderating effect. Furthermore, this study reveals the variable impacts of ESG practices in different corporate ‎settings, industries, and institutional frameworks. Moreover, it demonstrates how ESG practices ‎boost corporate value through an enhanced reputation and increased government innovation ‎subsidies. It offers new insights on the strategic value of ESG for corporations and ‎policymakers. It also extends the theoretical framework by integrating attention-based and upper ‎echelons perspectives into the ESG discourse. ‎.

Fintech Development and Firm Technological Innovation Efficiency: Empirical Findings in China

As a new combination of finance and technology, fintech not only makes people's daily life more convenient but also brings new opportunities for firm growth. Yet, although multiple parties in society have benefited tremendously from the development of fintech, its actual impact on FTIE remains unclear. For this purpose, we adopted a two-way fixed-effect model and considered the data of A-share-listed companies from 2011 to 2019 to analyze the impact of fintech development on FTIE in China and its associated mechanism. We found that fintech development negatively affected FTIE by increasing business risks and debt pressures through risk transmission and regulatory arbitrage, respectively. This finding remains robust after using instrumental variable tests and adopting Poisson and Tobin regression models. Furthermore, such negative impacts are higher for firms in the eastern region, nonmanufacturing firms, and state-owned enterprises. Our findings contribute significantly to the literature on technological innovation and financial regulation by shedding light on the negative impacts of the dominating fintech development on FTIE.

Platform economy development and energy efficiency inequality: evidence from China.

Alleviating energy efficiency inequality between regions is critical for achieving green sustainable development and environmental equality. This study constructs platform economy development index and adopts Theil index to measure energy efficiency inequality. By using panel data from 30 regions in China spanning from 2013 to 2020, this study investigates the influence of platform economy development on energy efficiency in inequality through a two-way fixed-effects model. The results show that (1) platform economy development can alleviate energy efficiency inequality between regions. After the robustness tests, the results still support the findings. (2) When the level of industrial agglomeration, marketization and environmental decentralization is high, platform economy development is more effective in alleviating energy efficiency inequality. (3) Platform economy development can optimize energy resources allocation, promote energy utilization technology flow and narrow the green finance development gap, thus alleviating energy efficiency inequality. Governmental departments should promote platform economy development and green finance, and optimize renewable energy allocation.

THE RELATIONSHIP BETWEEN LONG-TERM CARE OMBUDSMAN PROGRAM SPENDING AND NURSING HOME OUTCOMES

Abstract As part of the Older Americans Act, State Long-term Care Ombudsman Programs (LTCOP) serve older adults in nursing homes (NHs) and board and care facilities. The National Academies of Science, Engineering, and Medicine called for increased LTCOP funding to improve NH quality. We hypothesized that increases in spending on LTCOP would be associated with a lower prevalence of NH residents with low-care needs who could be cared for in the community and fewer residents taking antipsychotics. We conducted a secondary analysis using the National Ombudsman Reporting System, NH facility-level data from LTCfocUS.org for 15,592 US NHs (2011-2018), and the Area Health Resource File. Using a two-way fixed effects model with standard errors clustered at the facility-level, we examined the relationship between LTCOP spending per LTC bed at the state-level and outcomes, controlling for year, state, facility, and market characteristics. Increased LTCOP spending was associated with a lower proportion of residents in NHs with low-care needs and a lower percent of residents receiving antipsychotics (p < .0001). In 2011, the average share of low-care NH residents (weighted by bed size) was 13.34%, and the share of residents on antipsychotics was 25.95%. For every $25 annual change in LTCOP funds, there was a .84 percentage point decrease in the prevalence of low-care residents for the average NH, and a .80 percentage point decrease in the share of residents receiving antipsychotics. States that have increased funding for their LTCOP observe better outcomes. This documents the need to increase funding to support LTCOP.

The effects of equalization of regional basic public services on multidimensional vulnerability: evidence from China

ABSTRACT Based on the four waves of micro panel data from the China Family Panel Studies (CFPS), this study uses a two-way fixed effect model to analyse the impact of equalization of regional basic public services on the multidimensional vulnerability of families and its mechanism. The main findings of this study are as follows, firstly, regional basic public services and its equalization can significantly alleviate the multidimensional vulnerability of families; Secondly, regional basic public services and its equalization can reduce the multidimensional vulnerability of families by improving the level of regional economic development; Thirdly, the impact of regional basic public services and its equalization on the multidimensional vulnerability of households vary significantly among different groups, urban and rural areas, and different regions.

The role of innovation and entrepreneurship in promoting common prosperity in China: Empirical evidence from a two-way fixed effects model

Common prosperity stands as a pivotal concept and objective within China’s socialism with distinctive characteristics, serving as a fundamental assurance and basis for ensuring its people’s happiness and comprehensive development. This research employs a Coupled Coordination Degree Model to construct a common prosperity Index using data from China between 2010 and 2020. The study investigates the influence of innovation and entrepreneurship on common prosperity while examining the regulating roles played by the government and market during this process. The outcomes demonstrate that innovation substantially facilitates the realization of common prosperity. The relationship between entrepreneurship and common prosperity follows a positive "U"-shaped curve, where entrepreneurship significantly contributes to common prosperity upon reaching a particular scale. Further investigations reveal heterogeneity in the impact of innovation and entrepreneurship on common prosperity. Specifically, innovation significantly contributes to common prosperity in the northern regions, whereas entrepreneurship has a noteworthy impact on common prosperity in the southern regions. Moreover, it is worth noting that both innovation and entrepreneurship have a significant influence on common prosperity in areas characterized by low economic development levels and a scarcity of fixed capital. The fiscal effects of the government attenuate the promoting effect of innovation on common prosperity but enhance the adverse influence of entrepreneurship. On the contrary, market mechanisms mitigate the negative impact of entrepreneurship on common prosperity. Consequently, achieving common prosperity requires strengthened regional innovation cooperation, encouraging advanced regions to lead underdeveloped regions, and leveraging the regulatory roles of both the government and the market, thus progressing gradually towards common prosperity.

Green financial structure and carbon emissions: A structural matching perspective

Although the carbon reduction role of green finance has been highlighted in the context of global warming, discussions on green finance have primarily focused on size rather than structure. Based on Chinese panel data from 2008 to 2019, this paper distinguishes itself by investigating the relationship between green financial structures and carbon emission intensity from a structural matching perspective using the two-way fixed effect model, system generalized method of moments model, quantile regression, and the mediating effect model. Our findings indicate that a green financial structure can lower overall carbon emission intensity and that an inverted U-shaped carbon emission mitigation effect results from a green financial structure. Additionally, green financial structures alleviate carbon emission intensity by facilitating the development of energy technology. Furthermore, greater degrees of finance-technology matching effectively lower carbon emission intensity. These findings provide lessons for countries striving to construct comprehensive and reasonable green financial systems to address climate change.

Cold weather isolation is worse in poor and non-white neighborhoods in the United States

Social isolation can cause a variety of adverse physical and mental health effects and is central to understanding broader social disparities among marginalized groups in the United States. This study aims to assess whether temperature variation is associated with daily social isolation at the neighborhood level. I test a series of two-way fixed effects models to see if mean daily temperature is associated with individuals spending the entire day at home, as measured using smartphone data, across a sample of 45 million devices in 2019 in the United States. Using interaction terms, I specifically examine heterogeneity in temperature effects by neighborhood racial composition and socioeconomic status. The two-way fixed effects models reveal highly statistically significant negative coefficients for the interaction between temperature and neighborhood proportion Black, temperature and neighborhood proportion Hispanic, and temperature and neighborhood residential disadvantage, in predicting the probability of spending the entire day at home. In marginal terms, the findings indicate the gap in the probability of spending the entire day at home between an all-Black neighborhood and an all-White neighborhood grows by nearly 10 percentage points from the warmest day of the year to the coldest day of the year in some parts of the United States. My models highlight how residents of poor and majority Black and Hispanic neighborhoods experience disproportionate social isolation in the form of a greater propensity to spend the entire day at home.

Impact of digital city competitiveness on total factor productivity in the commercial circulation industry: evidence from China’s emerging first-tier cities

In the age of rapid technological advancement, the proliferation of digital technologies has reshaped urban landscapes, affecting economic, social, and environmental dynamics. Urban digital transformation is more than just a technological innovation; it stands at the core of future urban competitive strategies. As this trend evolves, the commercial circulation industry is poised for significant opportunities. However, the academic exploration into the relationship between the level of urban digitalization and the total factor productivity of the commercial circulation industry remains limited. To address this gap, this study employs data from 15 emerging first-tier cities in China. Initially, a Digital City Competitiveness Index was established, with results indicating Hangzhou taking the lead, while other cities were categorized into distinct tiers. Utilizing a two-way fixed-effects model, the research then investigates the impact of digital city competitiveness on the total factor productivity of the commercial circulation industry. The findings suggest that digital city competitiveness significantly enhances the total factor productivity within this industry. Furthermore, the study examines the influences of various sub-dimensions of digital city competitiveness on total factor productivity. Notably, investments in urban information infrastructure emerge as the most pronounced positive factor, followed by industrial development, innovation, services, and governance. In contrast, the urban ecosystem dimension exerts a negative impact. This research fills an existing void in the literature concerning the relationship between digital city competitiveness and total factor productivity, offering profound insights into the interplay between digital city development and its economic benefits. In addition, the conclusions provide policy implications for decision-makers, highlighting the importance of bolstering urban information infrastructure, encouraging enterprises to innovate, fostering industrial clusters, enhancing urban service capabilities through digital means, elevating public participation, and emphasizing environmental conservation.

Do county financial marketization reforms promote food total factor productivity growth?: a mechanistic analysis of the factors quality of land, labor, and capital

Improving food total factor productivity is a necessary way to break the double constraint of resources and environment, and promote the transformation of the food production system and the realization of the sustainable development goal of zero hunger. Based on the panel data of 729 counties in China from 2010 to 2019, this paper analyzes the effect of county financial marketization reform on food total factor productivity by using a two-way fixed effects model, focusing on the mechanism of the quality of factors such as land, labor and capital. The results show that county financial marketization reform promoted food total factor productivity growth by promoting technical progress, while technical efficiency did not play a significant role. Heterogeneity analysis shows that the effect of county financial marketization reform on grain total factor productivity is not significantly different in eastern and central China. There is a significant difference in the western region, where county financial market reform hindered the growth of grain total factor productivity. In terms of different functional areas of grain production, the facilitating effect is only played in the main grain production area, and the inhibiting effect is played in the main grain marketing area. Mechanistic analysis shows that the county financial marketing reform promoted the growth of food total factor productivity by improving the quality of labor and land, while the quality of agricultural capital has a masking effect. On this basis, it is necessary for the government to implement differentiated financial market-oriented reform strategies, and to guide and encourage county financial institutions to provide financial services to improve the quality of agricultural labor and farmland through tax incentives and loan interest subsidies.

How Does Network Infrastructure Construction Affect Livestock Carbon Emissions?

Against the backdrop of new carbon peak and carbon neutrality targets, China must address livestock carbon emissions (LCEs), which account for the largest proportion of agricultural carbon emissions in China. China has been promoting network infrastructure construction (NIC) for digital transformation. This study explores whether NIC can affect LCEs. To capture the potential effects of NIC, a conceptual framework is constructed originally and its impacts on LCEs are tested empirically through a two-way fixed effect model. The results show that NIC can significantly reduce LCEs. The results hold steady in various robustness checks, and the impacts express heterogeneities across provinces with different LCE levels, NIC levels, and regions. Mechanism analysis reveals that NIC can increase LCEs through the livestock industry scale effect, which is nevertheless outweighed by technological innovation and factor allocation’s reduction effects triggered by NIC. Additionally, transportation infrastructure construction serves a moderating role by reinforcing the reduction effect of NIC on LCEs. The conclusions are crucial for advancing the understanding of NIC’s potential benefits and policymaking for carbon emissions reduction in China.

Association of Medicaid expansion with health insurance, unmet need for medical care and substance use disorder treatment among people who inject drugs in 13 US states.

Impoverished people who inject drugs (PWID) are at the epicenter of US drug-related epidemics. Medicaid expansion is designed to reduce cost-related barriers to care by expanding Medicaid coverage to all US adults living at or below 138% of the federal poverty line. This study aimed to measure whether Medicaid expansion is (1) positively associated with the probability that participants are currently insured; (2) inversely related to the probability of reporting unmet need for medical care due to cost in the past year; and (3) positively associated with the probability that they report receiving substance use disorder (SUD) treatment in the past year, among PWID subsisting at ≤ 138% of the federal poverty line. A two-way fixed-effects model was used to analyze serial cross-sectional observational data. Seventeen metro areas in 13 US states took part in the study. Participants were PWID who took part in any of the three waves (2012, 2015, 2018) of data gathered in the Center for Disease Control and Prevention's National HIV Behavioral Surveillance (NHBS), were aged ≤ 64years and had incomes ≤ 138% of the federal poverty line. For SUD treatment analyses, the sample was further limited to PWID who used drugs daily, a proxy for SUD. State-level Medicaid expansion was measured using Kaiser Family Foundation data. Individual-level self-report measures were drawn from the NHBS surveys (e.g. health insurance coverage, unmet need for medical care because of its cost, SUD treatment program participation). The sample for the insurance and unmet need analyses consisted of 19 946 impoverished PWID across 13 US states and 3 years. Approximately two-thirds were unhoused in the past year; 41.6% reported annual household incomes < $5000. In multivariable models, expansion was associated with a 19.0 [95% confidence interval (CI) = 9.0, 30.0] percentage-point increase in the probability of insurance coverage, and a 9.0 (95% CI = -15.0, -0.2) percentage-point reduction in the probability of unmet need. Expansion was unrelated to SUD treatment among PWID who used daily (n = 17 584). US Medicaid expansion may curb drug-related epidemics among impoverished people who inject drugs by increasing health insurance coverage and reducing unmet need for care. Persisting non-financial barriers may undermine expansion's impact upon substance use disorder treatment in this sample.

Revisiting the effects of state earned income tax credits on infant health: a quasi-experimental study using contiguous border counties approach

BackgroundTo examine the effects of refundable state earned income tax credits (EITC) on infant health.MethodsWe use the restricted-access U.S. birth certificate data with county codes from 1989 to 2018. Birth outcomes include birth weight, low birth weight, gestational weeks, preterm birth, and the fetal growth rate. The analytical sample includes single mothers with high school education or less. Two specifications of two-way fixed effects models are employed. The first specification accounts for shared time trends across all states/counties. The second specification estimates effects based on EITC changes within contiguous counties across state borders which accounts for contemporaneous events specific to each contiguous county pair. Models are estimated pooling and stratifying by parity subgroups.ResultsUnder the first specification, refundable state EITC is associated with improved birth outcomes. Pooling all parity, a 10%-point increase in refundable EITC is associated with an 8-gram increase in birth weight (95% CI: 2.9,14.6). The effect increases by parity. In contrast, the estimates from the second model are much smaller and statistically non-significant, both pooling and stratifying by parity.ConclusionsComparing contiguous counties across state borders, there is no evidence that refundable state EITC affects birth outcomes. However, the estimates still do not rule out moderate to large benefits for third or higher born infants.

The impact of non-grain conversion of cultivated land on the relationship between agricultural carbon supply and demand

Increasing carbon sinks and reducing emissions in agricultural system is important for global sustainable development. Affected by the increasing cost and the declining profit of grain planting in China, the overall agricultural planting structure in the Northwest region showed a trend of conversion to non-grain crops. However, the impact of the non-grain conversion of cultivated land on agricultural carbon supply and demand is unclear. Therefore, taking Gansu Province as an example, this paper constructed a theoretical framework for the impact of non-grain conversion on agricultural carbon supply and demand, and empirically tests the relationship between non-grain conversion and carbon supply and demand index using a two-way fixed effects model based on statistical panel data from 2000 to 2020. The study found that the proportion of non-grain crop planting areas in the Gansu Province increased from 24.88% to 32.90% from 2000 to 2020. The proportion of non-grained medium and high value areas increased significantly and spread from a localized to a province-wide influence. In the past 21 years, the total agricultural carbon absorption showed an inverted “N” type downward development trend and was greatly affected by the carbon absorption of grain crops (especially wheat, corn), while the total agricultural carbon emission showed an “N” type upward trend and was greatly affected by the carbon emissions of non-grain crops (especially vegetables). The increase in the area of non-grain crops weakened the carbon sink effect of farmland and intensified its carbon source properties, resulting in a decrease in the carbon supply-demand index (SDIC) from 0.187 to 0.023. The rate of non-grained level (NGL) is significantly negatively correlated with the SDIC, and that for every 1% increase in the NGL, the SDIC will decrease by 0.728%. Based on this, policy recommendations for optimizing planting structures and agricultural practices are proposed with a view to providing theoretical support for achieving a win-win situation for food security and ecological safety in Gansu Province.