Regression Discontinuity Approach Research Articles

Defying the Rally During COVID-19 Pandemic: A Regression Discontinuity Approach.

ObjectiveDo people set aside their partisan differences and rally around elected officials during a pandemic? President Trump's delegation of responsibility to the states during the COVID‐19 pandemic placed governors on the frontlines of the battle; some have shined and garnered positive national attention, others have wilted under the pressure of the national spotlight.MethodsWe use regression discontinuity design and exploit a discontinuity in the state's political events to assess the support of a governor's response to the pandemic.ResultsUsing survey data from Florida's registered voters, we find that Governor DeSantis's approval dropped by 7 percentage points following his “Safer at Home” order press conference on April 1.ConclusionOur results suggest that under certain circumstances partisanship can blunt a “rally around the flag” effect. This finding provides context to understanding when and under which circumstances elected officials can expect increases (or decreases) in public support.

DOES EARLY ACCESS TO PENSION WEALTH IMPROVE HEALTH?

We examine the health impacts of early access to public pension wealth by exploiting a unique policy in Singapore allowing individuals to withdraw a proportion of their pension savings after their 55th birthday. For the identification, we employ a regression discontinuity design by comparing individuals before and after their 55th birthday. To address anticipated and lagged health impacts, we adopt the donut regression discontinuity approach. Using nationally representative monthly panel data, we find that early access to pension wealth improves self‐reported overall health. (JEL I10, H55, D15)

Presidential Elections, Divided Politics, and Happiness in the USA

We examine the effects of the 2016 and 2012 US presidential election outcomes on subjective wellbeing across party identification. We use Gallup data and a regression discontinuity approach, and focus primarily on evaluative (life satisfaction) and hedonic (positive and negative affect) indicators. We find that both elections had strong negative wellbeing effects on those who identified with the losing party, with little or no increase in wellbeing for those identifying with the winning party. The negative effects for the losing side were larger in 2016 than in 2012, by a factor of three on some indicators, and were driven mainly by women and middle‐income households. As such, both elections had a net negative wellbeing effect, but more so in 2016. Local voting patterns did not have a substantial wellbeing impact, nor did congressional elections taking place the same day. In 2016, the election also changed respondents’ perceptions about the economy, their financial status, and their community. After both elections, hedonic wellbeing gaps across parties typically dissipated within two weeks, but there was more persistence in evaluative wellbeing gaps, especially in expected life satisfaction. The latter gap persisted throughout 2017.

Equal ownership split in international joint ventures: performance implications in an emerging market

Are equal ownership splits advantageous for international joint ventures (JVs) in an emerging economy? Following a regression discontinuity approach, this study addresses the question by investigating subsidiary-level financial performance and considers an inherent endogeneity issue. Using panel data of international JVs in China, we compare the performance of equal ownership, minority, and majority JVs. We find that equal ownership JVs generate financial advantages over minority- or majority-foreign-owned JVs and other ownership types when a foreign partner possesses limited knowledge of the host country. Moreover, we find that the financial benefits of an equal ownership split are more salient for JVs located in regions with less developed institutions.

Not for want of trying: Effort and Success of women in principles of microeconomics

Prior research suggests that women enter their first college-level economics class with lower expectations of success while also thinking they must work harder than men to earn similar grades. This paper examines effort (completion of optional work) and success (grades) in principles of economics, with special focus on differences between women and men. Two sets of tests are performed. One set, probit models controlling for student attributes, examines submission rates for optional online quizzes and an optional final exam; a second set uses a regression discontinuity approach to measure incentive effects of grades, examining performance on exams. Women submit more quizzes and have exam scores and course grades that are similar to men, in contrast to numerous prior studies showing a gender difference. Quizzes are identified as one potential reason for men-women exam score equivalence. Additionally, women with a B+ (just shy of an A-) before the final exam are more likely to choose to submit the optional final compared to similar men.

The timing and consequences of seasoned equity offerings: A regression discontinuity approach

The likelihood of seasoned equity offerings (SEOs) jumps discontinuously when the stock price equals the most recent equity offer price. Anchoring on the last offer price holds after considering executive turnovers, stock splits, earnings management, or dividend adjustments. Using a fuzzy regression discontinuity design around this cutoff, which exploits local randomness in stock prices, we investigate the consequences of anchoring in SEOs. We find significant increases in cash holdings and acquisitions of lower quality, with no real effects on investment or employment. Overall, we provide some of the cleanest estimates, to date, of the timing and causal effects of SEOs.

Revisiting the Effects of Unemployment Insurance Extensions on Unemployment: A Measurement‑Error‑Corrected Regression Discontinuity Approach

This study documents two potential biases in recent analyses of UI benefit extensions using boundary-based identification: bias from using county-level aggregates and bias from across-border policy spillovers. To examine the first bias, the analysis uses a regression discontinuity approach that accounts for measurement error in county-level aggregates. These results suggest much smaller effects than previous studies, casting doubt on the applicability of border-based designs. The analysis then shows substantial spillover effects of UI benefit duration on across-border work patterns, consistent with increased tightness in high-benefit states and providing evidence against a dominant vacancy reduction response to UI extensions. (JEL E24, E32, J22, J64, J65)

Education and Innovation: The Long Shadow of the Cultural Revolution

The Cultural Revolution deprived Chinese students of the opportunity to receive higher education for 10 years when colleges and universities were closed from 1966-1976. We examine the human capital cost of this loss of education on subsequent innovation by firms, and ask if it impacted firms more than 30 years later. We examine the innovation of firms with CEOs who turned 18 during the Cultural Revolution, which sharply reduced their chances of attending college. Using multiple approaches to control for selection and endogeneity, including an instrument based on whether the CEO turned 18 during the Cultural Revolution and a regression discontinuity approach, we show that Chinese firms led by CEOs without a college degree spend less on R&D, generate fewer patents, and receive fewer citations to these patents.

Tax incentive and household saving strategy: A regression discontinuity approach to catch-up contributions

ABSTRACT This study examined how the catch-up provision—a tax-deferral incentive—impacts total retirement saving and household saving strategies. Using the Survey of Consumer Finance from 2004 to 2016, this study found that the catch-up provision does not have a positive impact on total retirement saving in the majority of cases; however, this provision was found to positively impact contributions to defined contribution plans among middle-class households whose income ranges were between $50,00 and $100,000. The study also found that household saving and consumption habits, which include self-control factors, as well as employer-match programs, play an important role in increasing savings for retirement. The results of this study have implications for future work on a broad spectrum of social policies and programs that promote financial security in retirement.

State partisanship and higher education

This paper uses a regression discontinuity approach to estimate the causal effect of a governor’s party affiliation on higher education in the U.S. The findings indicate that when a Democrat wins a close race for governor, there is an increase in state revenues appropriated to associate’s-degree-granting colleges. There is also some evidence that minority-serving institutions receive additional state funds when a Democratic governor is elected. There is little evidence, however, that state partisanship affects other types of outcomes (e.g. enrollment).

Going Places: Effects of Early U.S. Compulsory Schooling Laws on Internal Migration.

Both the industrialization thesis and institutional theories of education hypothesize that early educational expansion increased internal migration. We take advantage of state variation in early U.S. compulsory schooling laws and use a regression discontinuity approach to test this hypothesis in 1860-1950 Census data. Results indicate that those required to attend school were more likely to leave their state of birth than others. Effects were stronger among men in states with low occupational status scores, suggesting education encouraged migration out of states with fewer occupational opportunities. Potential contemporary implications for the U.S. and developing countries are discussed.

Multidimensional Effects of Central Clearing on CDS Market Liquidity and Their Economic Channels – A Regression Discontinuity Approach

In this study, I analyze the effect of central clearing on market liquidity in the CDS market. This study extends existing literature by using semi-parametric and non-parametric regression discontinuity designs (RDD) in order to isolate the effect of central clearing on measures of market tightness, market depth and market resiliency. I find evidence for a decrease in absolute bid-ask spreads with the beginning of central clearing and an increase in gross trading volume. Bid-ask spread resiliency decreases with the beginning of central clearing. These effect differ across contracts depending on their fundamental risk and liquidity risk. I show that counterparty risk and inventory costs may partly explain the effects of central clearing on CDS market liquidity. Especially the lower relevance of counterparty risk and lower regulatory capital charges seem to affect positively dealer competition and risk-taking capacity in the CDS market.

Time devoted to home production and retirement in couples: A panel data analysis

We analyse the effects of retirement of one partner on time devoted to home production by both partners in a couple. Using longitudinal data on couples in Germany, we control for fixed household specific effects and allow for endogeneity of retirement using both a regression discontinuity approach and variation in the early and full retirement age across cohorts and with labour market history. Furthermore, we separately estimate the effect of retirement and the effect of lay-off due to an exogenous shock (i.e. plant closure) for each spouse. For both men and women, a transition from work to retirement significantly increases the amount of their own home production. Similar effects are found for other (layoff induced) exits from work. We find much smaller negative cross-effects of retirement or other exits from work on time spent on home production done by the male partner; the effect of the husband's retirement on the wife's home production is not statistically significant.

Association Between Fetal Exposure to Famine and Anthropometric Measures in Adulthood: A Regression Discontinuity Approach.

The aim of this study was to investigate the differences in six anthropometric measurements of people born during and immediately after the 1959 to 1961 Great Chinese Famine using aregression discontinuity approach. Data were drawn from the baseline of theChina Kadoorie Biobank study, and a subset of data from 76,912 participants was analyzed. We performed regression discontinuity among participants who were born during the famine (October 1959 to October 1962) and immediately after the famine period (November 1962 to October 1964) by using local linear and parametric regressions. All analyses were conducted by sex and study area. Significantly, there were increases of 0.30 kg/m2 (P = 0.007) in BMI, 0.81 kg (P = 0.028) in weight, 8.57 mm (P = 0.004) in waist circumference, and 5.07 mm (P = 0.004) in hip circumference for rural women who were exposed to famine during their fetal period compared with those who were not exposed to famine in utero. However, such statistically significant increases in anthropometric values were not observed in local linear regression and most parametric models among rural men or in theurban population. Rural Chinese women who were exposed to famine duringthe fetal period were observed to have higher levels of BMI, weight, waist circumference, and hip circumference in adulthood.

Does emission control area policy reduce sulfur dioxides concentration in Shanghai?

As an important measure to abate ship-source air emissions, the establishment of Emission Control Area (ECA) has been adopted not only at international level, but also at national and regional level. However, there exists a research gap of employing econometric models to enrich the ECA policy evaluation research by testing the effectiveness of an ECA policy based on the empirical data. This paper focuses on the effectiveness of the ECA policy in shanghai port by adopting regression discontinuity (RD) approach. The RD design is considered as a wonderful substitution for the randomized control trial, which usually serves as a conventional and effective tool to address endogeneity. The causal effect of the ECA policy on the SO2 concentration reduction can be detected by the RD approach. According to the estimated results, there is a discontinuity around the ECA policy cutoff point, and it is indicated that the SO2 concentration in Shanghai decreased by at least 0.229 μg/m3 daily on average due to the implementation of the ECA policy. The positive role that the ECA policy plays in reducing SO2 concentration in Shanghai is well demonstrated. This paper also puts forward an agenda for the future studies in the domain of the ECA policy evaluation.

The Real Winner's Curse

AbstractTraditional theories of democracy suggest that political representation of excluded groups can reduce their incentives to engage in conflict and lead to lower violence. However, this argument ignores the response of established elites when (1) their interests are threatened by the policy stance of new political actors and (2) elites have a comparative advantage in the exercise of violence. Using a regression discontinuity approach, we show that the narrow election of previously excluded left‐wing parties to local executive office in Colombia results in a one standard deviation increase in violent events by right‐wing paramilitaries. We interpret this surge in violence as a reaction of traditional elites to offset the increase in outsiders' access to formal political power. Consistent with this interpretation, we find that violence by left‐wing guerrillas and other actors is unaffected and that violence is not influenced by the victory of right‐wing or other new parties in close elections.

The Intergenerational Effects of Requiring Unemployment Benefit Recipients to Engage in Non-Search Activities

We use a quasi-experimental design and national administrative data to analyze the intergenerational effects of introducing non-search activity requirements for unemployment benefit recipients. The Mutual Obligations Initiative (MOI) required people aged 18–34 receiving unemployment benefits to undertake a range of non-search activities (e.g., volunteering, training) in addition to job search. The young adults (aged 23–28) we study were in early adolescence in 1999 when the MOI was introduced. Using a regression discontinuity approach, we find that those young adults whose fathers were subject to the MOI have a lower incidence of unemployment benefit receipt in comparison to those whose fathers were not. More detailed investigation suggests that completion of the mandated activities, role modeling, changes in attitudes, improved health, and greater support and stability are potential channels for this effect.

Presidential Elections, Divided Politics, and Happiness in the U.S.

We examine the effects of the 2016 and 2012 U.S. presidential election outcomes on the subjective well-being of Democrats and Republicans using large-scale Gallup survey data and a regression discontinuity approach. We use metrics that capture two dimensions of well-being – evaluative (life satisfaction) and hedonic (positive and negative affect) – and document a significant negative impact on both dimensions of well-being for Democrats immediately following the 2016 election and a negative but much smaller impact for Republicans following the 2012 election. However, we found no equivalent positive effect for those identifying with the winning party following either election. The results also vary across gender and income groups, especially in 2016, with the negative well-being effects more prevalent among women and middle-income households. In addition, in 2016 the votes of others living in the respondent’s county did not have a large impact on individual well-being, although there is some suggestive evidence that Democrats in more pro-Trump counties suffered a less negative effect, while Republicans in less pro-Trump and more typically urban counties were actually negatively impacted by the election outcome. We also find evidence that being on the losing side of the election had negative effects on perceptions about the economy, financial well-being, and the community of residence. Lastly, the evaluative well-being gaps between the different party affiliations tend to persist longer, with those in expected life satisfaction lasting until at least the end of 2016, while the hedonic well-being gaps typically dissipate within the two weeks following the election.

The Intergenerational Effects of Requiring Unemployment Benefit Recipients to Engage in Non-Search Activities

We use a quasi-experimental design and national administrative data to analyze the intergenerational effects of introducing non-search activity requirements for unemployment benefit recipients. The Mutual Obligations Initiative (MOI) required people aged 18–34 receiving unemployment benefits to undertake a range of non-search activities (e.g., volunteering, training) in addition to job search. The young adults (aged 23–28) we study were in early adolescence in 1999 when the MOI was introduced. Using a regression discontinuity approach, we find that those young adults whose fathers were subject to the MOI have a lower incidence of unemployment benefit receipt in comparison to those whose fathers were not. More detailed investigation suggests that completion of the mandated activities, role modeling, changes in attitudes, improved health, and greater support and stability are potential channels for this effect.

Education and Innovation: The Long Shadow of the Cultural Revolution

The Cultural Revolution deprived Chinese students of the opportunity to receive higher education for 10 years when colleges and universities were closed from 1966-1976. We examine the human capital cost of this loss of education on subsequent innovation by firms, and ask if it impacted firms more than 30 years later. We examine the innovation of firms with CEOs who turned 18 during the Cultural Revolution, which sharply reduced their chances of attending college. Using multiple approaches to control for selection and endogeneity, including an instrument based on whether the CEO turned 18 during the Cultural Revolution and a regression discontinuity approach, we show that Chinese firms led by CEOs without a college degree spend less on R&D, generate fewer patents, and receive fewer citations to these patents.