Regression Discontinuity Approach Research Articles

The impact of the Public Pension Program on the elderly’s medical expenditures: a regression discontinuity approach

ABSTRACT The surge in aging societies has increased the relevance of retirement as a research topic. Utilizing the public data obtained from the China Family Panel Studies, this paper applies a regression discontinuity approach to assess the impact of China’s current Public Pension Program on the medical expenditures of the elderly. The results reveal that the Public Pension Program increases out-of-pocket medical expenditures, hospitalization expenditures, and other injury and illness expenses. The results also report that being insured by Basic Social Health Insurance has a mitigating effect on the medical expenditures of the elderly; furthermore, there are significant differences in the use of medical resources between regions and urban and rural areas in China. Therefore, ensuring the sustainability of pension funds and social health insurance funds and developing customized private insurance according to areas can play a positive role in improving the use of medical resources and relieving the medical burden on the elderly population.

Using Bid Rotation and Incumbency to Detect Collusion: A Regression Discontinuity Approach

Abstract Cartels participating in procurement auctions frequently use bid rotation or prioritize incumbents to allocate contracts. However, establishing a link between observed allocation patterns and firm conduct has been difficult: there are cost-based competitive explanations for such patterns. We show that by focusing on auctions in which the winning and losing bids are very close, it is possible to distinguish allocation patterns reflecting cost differences across firms from patterns reflecting non-competitive environments. We apply our tests to two datasets: the sample of Ohio milk auctions studied in Porter and Zona (1999, “Ohio School Milk Markets: An Analysis of Bidding”, RAND Journal of Economics, 30, 263–288), and a sample of municipal procurement auctions from Japan.

Household consumption and home production at retirement in Thailand: evidence from a regression discontinuity approach

AbstractThis paper uses Socio-Economic Surveys covering the period from 2013 to 2019 and the 2015 Time Use Survey to investigate the extent to which household consumption changes at retirement in Thailand. A fuzzy regression discontinuity design is applied to evaluate the retirement effect on total household expenditure and expenditures on four major categories: food-at-home, work-related items, non-durable entertainment, and others. The results reveal that retirement decreases household expenditure by 11%. Further investigations show that the dramatic declines in expenditures on work-related and non-durable entertainment contribute significantly to the spending drop at retirement. The magnitudes of the declines are more pronounced for low-income and low-wealth households. The results also indicate that the retirees spend more leisure time on home production activities after retirement. Once accounting for this effect, it finds that the drop in total household expenditure decreases to 6%. These results suggest that the sizable consumption expenditure drop at retirement is due to substituting away from market purchased goods toward home-produced goods.

Association Between the Patient Driven Payment Model and Therapy Utilization and Patient Outcomes in US Skilled Nursing Facilities

In October 2019, Medicare changed its skilled nursing facility (SNF) reimbursement model to the Patient Driven Payment Model (PDPM), which has modified financial incentives for SNFs that may relate to therapy use and health outcomes. To assess whether implementation of the PDPM was associated with changes in therapy utilization or health outcomes. This cross-sectional study used a regression discontinuity (RD) approach among Medicare fee-for-service postacute-care patients admitted to a Medicare-certified SNF following hip fracture between January 2018 and March 2020. Skilled nursing facility admission after PDPM implementation. Main outcomes were individual and nonindividual (concurrent and group) therapy minutes per day, hospitalization within 40 days of SNF admission, SNF length of stay longer than 40 days, and discharge activities of daily living score. The study cohort included 201 084 postacute-care patients (mean [SD] age, 83.8 [8.3] years; 143 830 women [71.5%]; 185 854 White patients [92.4%]); 147 711 were admitted pre-PDPM, and 53 373 were admitted post-PDPM. A decrease in individual therapy (RD estimate: -15.9 minutes per day; 95% CI, -16.9 to -14.6) and an increase in nonindividual therapy (RD estimate: 3.6 minutes per day; 95% CI, 3.4 to 3.8) were observed. Total therapy use in the first week following admission was about 12 minutes per day (95% CI, -13.3 to -11.3) (approximately 13%) lower for residents admitted post-PDPM vs pre-PDPM. No consistent and statistically significant discontinuity in hospital readmission (0.31 percentage point increase; 95% CI, -1.46 to 2.09), SNF length of stay (2.7 percentage point decrease in likelihood of staying longer than 40 days; 95% CI, -4.83 to -0.54), or functional score at discharge (0.04 point increase in activities of daily living score; 95% CI, -0.19 to 0.26) was observed. Nonindividual therapy minutes were reduced to nearly zero in late March 2020, likely owing to COVID-19-related restrictions on communal activities in SNFs. In this cross-sectional study of SNF admission after PDPM implementation, a reduction of total therapy minutes was observed following the implementation of PDPM, even though PDPM was designed to be budget neutral. No significant changes in postacute outcomes were observed. Further study is needed to understand whether the PDPM is associated with successful discharge outcomes.

Does the Employment Effect of National Minimum Wage Vary by Non-Employment Rate? A Regression Discontinuity Approach

Does the Employment Effect of National Minimum Wage Vary by Non-Employment Rate? A Regression Discontinuity Approach

Effects of the Earned Income Tax Credit for Childless Adults: A Regression Discontinuity Approach

Effects of the Earned Income Tax Credit for Childless Adults: A Regression Discontinuity Approach

Older Mothers' Employment and Marriage Stability When the Nest is Empty

A significant literature in the social sciences addresses the impact of child-bearing and rearing on marital stability and on mothers’ labour market outcomes. Much less is known about older mothers’ employment and marriage patterns when the adult children leave the parental nest. This study aims to shed light on these issues using longitudinal labour force data for France. Exploiting retirement laws for identification purposes, and taking a regression discontinuity approach, we find that older women’s retirement probability is positively associated with an empty nest. We also conclude that an empty nest is negatively associated with older mothers’ marriage probability. There is scope for better targeting of both family and retirement policies for older mothers during those critical years when adult children leave the parental nest.

Using Bid Rotation and Incumbency to Detect Collusion: A Regression Discontinuity Approach

Using Bid Rotation and Incumbency to Detect Collusion: A Regression Discontinuity Approach

Data, discretion and institutional capacity: Evidence from cash transfers in Pakistan

Administrative data is key to many government functions; but generating and maintaining it is costly and challenging in low-income countries. We study an overhaul of public assistance in Pakistan that created a national database of household assets and used the data to means-test cash transfers, eliminating discretion in their allocation. We use difference-in-differences and regression discontinuity approaches to quantify the effect of this reform. Favoritism and transfers to wealthy households dropped; we estimate that the welfare benefits of the reform were seven times as large as its costs. The reform improved public perceptions of social assistance and helped create a robust institution that survived political transitions.

Evaluating the effect of China’s targeted poverty alleviation policy on credit default: a regression discontinuity approach

ABSTRACT Although the literature has found that targeted poverty alleviation (TPA) policy has many positive effects, whether it has a negative impact on farmers’ credit has been under-analyzed. A regression discontinuity approach has been employed to estimate the TPA policy’s causal effects on credit default because the registered poor farmer was primarily determined by whether a farmer’s pre-policy income fell below a given poverty line. Using data from China Household Finance Survey in 2015 and 2017, we have found that China’s registered poor farmers have a higher probability of credit default. This is because registered poor farmers protected by TPA policy pursue higher risk economic activities, leading to a higher credit default. Further analysis has shown that credit default broadly occurs in married registered poor farmers. In contrast, it rarely occurs among those with high social capital. Our empirical results have suggested the Chinese government should improve the identification rules of registered poor farmers, such as subjective psychology, and strengthen the monitoring system of their participation in economic activities.

Effectiveness of Tax Policies in Corporate Restructuring: Evidence from China

ABSTRACT As an international practice, tax policies generally provide the required support to corporate restructuring. Accordingly, we used the regression discontinuity approach to analyze and evaluate the effectiveness of China’s tax policies in corporate restructuring in recent years. The study results revealed that developing policies in a targeted manner can promote corporate restructuring. Furthermore, the development of policies in China in 2014 has resulted in a compound effect. Therefore, the Chinese government may consider further improving the tax support for corporate restructuring through the following strategies: lowering the threshold for applying restructuring tax incentives, improving the design of restructuring tax policies, improving tax services, and strengthening tax supervision of high-risk restructuring issues.

The effect of international development association's (IDA) aid on conflict. A fuzzy regression discontinuity approach

In this paper, we try to explore the relationship between the World Bank's International Development Association (IDA) aid and domestic conflict. As IDA aid is distributed only to countries that fall below an income threshold, we employ a (fuzzy) regression discontinuity approach to estimate the causal effect of aid on conflict. Our results suggest that IDA aid leads to a decrease in protest events, such as anti-government demonstrations, strikes, and riots, and in an increase in violent events that involve forms of aggression, like assassinations of political leaders, purges, and revolutions. Our results, as well as a series of robustness tests, are consistent with the view that foreign aid may increase popular support for the government, thus reducing protests, and at the same time increase conflict over lootable aid rents, and so increasing events of extreme aggression.

The man in the middle—liquidity provision under central clearing in the credit default swap market: A regression discontinuity approach

AbstractIn this study, I analyze the effect of central clearing on credit default swap (CDS) market breadth, depth, and resiliency using a regression discontinuity design. I find evidence for a decrease in absolute bid–ask spreads and bid–ask spread resiliency and an increase in gross trading volume with the beginning of central clearing. However, we observe positive effects of central clearing on CDS market liquidity only for CDS contracts of high fundamental and liquidity risk. Further results indicate that lower trading frictions, that is, counterparty risk and regulatory capital charges, may explain the positive effects of central clearing on CDS market liquidity.

Does compulsory schooling affect health? Evidence from ambulatory claims data

Using claims data on more than 23 million statutorily insured, we investigate the causal effect of schooling on health in the largest and most comprehensive analysis for Germany to date. In a regression discontinuity approach, we exploit changes in compulsory schooling in West Germany to estimate the reduced form effect of the reforms on health, measured by doctor diagnoses in ICD-10 format covering physical as well as mental health conditions. To mitigate the problem that empirical results depend on subjective decisions made by the researcher, we perform specification curve analyses to assess the robustness of findings across various model specifications. We find that the reforms have, at best, very small impacts on the examined doctor diagnoses. In most of the specifications we estimate insignificant effects that are close to zero and often of the “wrong” sign. Therefore, our study questions the presence of the large positive effects of education on health that are found in the previous literature.

The academic effects of chronic exposure to neighbourhood violence

This paper estimates the causal effect of repeated exposure to violent crime on test scores in New York City. We use two empirical strategies; value-added models linking student performance on standardised exams to violent crimes on students’ residential block, and a regression discontinuity approach that identifies the acute effect of additional crime exposure within a one-week window. Exposure to violent crime reduces academic performance. Value-added models suggest the average effect is very small (approximately −0.01 standard deviations) but grows with repeated exposure. Regression discontinuity (RD) models also find a larger effect among children previously exposed. The marginal acute effect is as large as −0.04 standard deviations for students with two or more prior exposures. Among these, it is almost one tenth of a standard deviation for Black students. We provide credible causal evidence that repeated exposure to neighbourhood violence harms test scores, and this negative effect increases with exposure.

EU transfers and euroscepticism: can’t buy me love?

SUMMARY The future of an institution, such as the European Union, ultimately depends on people’s support. This paper investigates whether EU redistributive policies have improved public attitudes towards European integration, both in terms of public opinion and political preferences. We focus on Cohesion Policy funds, whose allocation allows us to single out these effects by means of a regression discontinuity approach. The results show that EU transfers have mitigated the rise of Eurosceptical attitudes and reduced political consensus for anti-EU parties. The effects are homogeneous across different socio-economic groups, including the most disadvantaged ones. The improvement in public support for the EU does not appear to be exclusively a spillover of the positive economic effect of funding; we show evidence suggesting the existence of a ‘reciprocity-effect’ channel, that is, citizens in recipient regions recognize the beneficial role of the EU as the source of funding.

Air pollution and employee treatment

Although the impacts of air pollution on individual health are well documented, it is unclear whether and how air pollution affects firm strategy on employee treatment. This study examines this issue in the context of China and presents strong evidence that air pollution significantly enhances employee treatment. To establish causality, we further instrument for air pollution using thermal inversions, introduce a regression discontinuity approach relying on the Huai River boundary, and a falsification test. Monetary compensation, safety security, and career training jointly determine our findings. Two plausible mechanisms are corporate brain drain and public attention. Our results are more pronounced for non-state-owned firms, and firms with less financial constraints, intensive R&D or competition, and increased job market opportunities. Overall, we highlight that air pollution is an important noneconomic factor driving firms' human capital and employee treatment strategy.

Causal Modelling in Fertility Research: A Review of the Literature and an Application to a Parental Leave Policy Reform

This paper reviews empirical studies that have examined the causal determinants of fertility behaviour. In particular, we compare the approaches adopted in the different disciplines to improve our understanding of how birth dynamics are influenced by changes in female employment and changes in family policies. The wide array of panel data that have become available in recent years provide great potential for advanced causal modelling in this field. Event history modelling has been a dominant approach in sociology and demography. However, researchers are increasingly turning to other methods to unravel causal effects, such as fixed-effects modelling, the regression discontinuity approach, and statistical matching. We summarise selected studies, and discuss the advantages and the shortcomings of the different approaches. In an empirical section, we analyse the impact of the German 2007 policy reform on birth behaviour to illustrate the difficulties involved in isolating policy effects. The final chapter concludes by underscoring that even simple modelling strategies may be beneficial for improving our understanding of how policy effects shape demographic behaviour, and for laying the groundwork for more fine-grained causal investigations.
 * This article belongs to a special issue on “Identification of causal mechanisms in demographic research: The contribution of panel data”.

How Much Does Size Erode Mutual Fund Performance? A Regression Discontinuity Approach

Abstract The level of diseconomies of scale in asset management has important implications for tests of manager skill and the expected level of performance persistence. To identify the causal impact of fund size on future returns, we exploit the fact that small differences in returns can cause discrete changes in Morningstar ratings that, in turn, generate discrete differences in fund size. Using our regression discontinuity approach, we find that ratings significantly increase fund size, but that fund size has a negligible effect on fund returns. Within Berk and Green’s (2004) model, the absence of meaningful fund-level diseconomies of scale implies that the lack of performance persistence arises from a lack of fund manager skill. Alternatively, the lack of performance persistence may arise from competitive pressures outside of their model.

Evaluating the impact of partial driving restrictions on local air quality in Chongqing using regression discontinuity design

Driving restriction is used to mitigate traffic congestion and improve air quality. A partial bridge restriction policy is created in Chongqing, China since the bridges are natural network bottlenecks due to the local river system. Is such a strategy really capable of reducing air pollution and further improving local air quality? Employing an integration of principal component analysis and a regression-discontinuity design approach, this study examines the short-run effect of the partial driving restrictions on the local air quality index in Chongqing, China. The examination is first conducted to the city level, and then its eight administrative districts are tested separately. The findings reveal that the air quality index of the whole city area has experienced deterioration after the introduction of restrictions in Chongqing. Among eight districts, Yuzhong is the only one experiencing an improvement of air quality index.