Conducting a difference-in-differences analysis with PLS-SEM: The classic 2x2 approach

The article below shows how one can conduct a difference-in-differences analysis employing the classic 2x2 approach for this type of analysis, using structural equation modeling via partial least squares (PLS-SEM).

Kock, N. (2024). Conducting a difference-in-differences analysis with PLS-SEM: The classic 2x2 approach. Data Analysis Perspectives Journal, 5(5), 1-8.

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Abstract:

Difference-in-differences analyses often employ a classic 2x2 scenario, which involves two conditions, control and treatment; and two points in time, before and after an intervention that may be tied to one of the conditions. In our analysis, we assess the impact on labor productivity of being in a more technology-intensive US state, instead of a more manufacturing-intensive one. Consistently with the difference-in-differences analysis scenario, we also assess the full latent growth effect of a government-driven age discrimination crackdown, in the technology-intensive state, on the previous effect – of being in a technology-intensive state on labor productivity. We do this by employing a model analyzed in the context of structural equation modeling via partial least squares (PLS-SEM). We also discuss advantages of using PLS-SEM in this scenario; which include assessments of causality, common method bias, and endogeneity.

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