The Zou-Wang-Mandel (ZWM) effect is a remarkable consequence of photon indistinguishability and continuous-variable entanglement in which an optical phase shift is imprinted on photonic modes associated with optical paths that that do not pass through the phase shift source. By bringing the canonical formalism of continuous-variable Gaussian states to bear on the mode-structure of the ZWM experiment, we show that the physical consequence of implementing optical path identity is a renormalization of quadrature squeezing which governs the entanglement of four effective optical modes. Nonperturbative expressions for the ZWM interference patterns and normalized first-order coherence function are derived. Generalizations to $\mathcal{H}$-graph states with more than four modes directly follow from the general method used to analyze the minimal example. We show that a ZWM interferometer with a laser-seeded signal mode, which estimates an idler phase shift by detecting photons that did not propagate through the phase shift, exhibits an optimal sensitivity comparable to that of a laser-seeded $SU(1,1)$ interferometer if path identity is implemented with high fidelity.

10 pages, 2 figures