Difference-in-Difference Design in Management Research

The difference-in-difference design has been used in several studies in management research. Below, you will find a brief summary of the studies with a particular focus on the difference-in-difference design.

Haack and Sieweke (2018)

Haack and Sieweke analyzed whether people change their propriety beliefs about inequality when they live in a system in which inequality is legitimized. Their study uses the division of Germany into a socialist and a capitalist state after World War II and the reunification in 1989/1990 (the treatment) to analyze how East Germans (the treatment group), who lived in the socialist part of Germany, changed their attitudes towards inequality after East Germany became a part of the capitalist West Germany in 1990 compared to West Germans (control group), who experienced no significant changes in the course of the German reunification. Their findings show that the inequality became more accepted by East Germans over time as a result of adaption process (i.e., people change their propriety beliefs) and replacement (i.e., older cohorts are replaced by younger cohorts whose members have a more positive propriety beliefs about inequality).

Mas (2006)

Mas analyzed whether salary raises below a certain reference point negatively affect job performance. He uses the case of cities in which (a) a wage dispute between police bargaining units and municipalities took place and in which (b) the dispute was resolved by an arbitrator who either decided in favor of the police bargaining units or the municipalities. To estimate the causal effect of a salary raise below a reference point on job performance, he compared changes in arrest rates, average sentence length, and crime reports before and after the ruling in cities where the arbitrator ruled in favor of the police bargaining units (control group) and in cities where the arbitrator ruled in favor of the municipalities (treatment group). The study finds a significant decline in arrest rates, incarceration probabilities and shorter jail sentences, and increases in crime rates in cities where arbitrators ruled in favor of the municipalities compared to cities where they ruled in favor of the police.