A recent econometric literature shows two distinct paths for identification with shift-share instruments, leveraging either many exogenous shifts or exogenous shares. We present the core logic of both paths and practical takeaways via simple checklists. A variety of empirical settings illustrate key points.

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1 January 2025

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Journal of Economic Perspectives 39(1) , pp.181-204, 2025

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DOI: 10.1257/jep.20231370

https://www.aeaweb.org/articles?id=10.1257/jep.20231370

This Journal article is published under the centre's Growth programme, Trade programme.