Interactive fixed effects estimators bias the average treatment effect on the treated if treatment heterogeneity has a linear factor structure, due to absorption and potential multicollinearity.
Lemma A.1.Consider the PO model in(1), withk 0 known and fixed
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Treatment-effect heterogeneity and interactive fixed effects: Can we control for too much?
Interactive fixed effects estimators bias the average treatment effect on the treated if treatment heterogeneity has a linear factor structure, due to absorption and potential multicollinearity.