Federal Reserve Board study finds demographic differences in U.S. state border counties that can weaken border-based policy evaluations

The Federal Reserve Board published a research paper assessing whether U.S. state border counties are demographically representative of nonborder counties, an assumption that underpins border-county difference-in-difference approaches commonly used to evaluate state policies. The study finds that demographic patterns at state borders can complicate interpretation of estimated policy effects by undermining external validity and identification. Comparisons of border and nonborder counties show border counties generally have higher proportions of White, older, and disabled populations, alongside occasional instances of wide demographic differences across state lines. A case study is used to illustrate how these differences can affect border-county policy research, and the paper highlights the need for robustness checks and explicit consideration of demographic composition when using border-based designs.