Regression Discontinuity Designs Based on Population Thresholds: Pitfalls and Solutions

Eggers, Andrew C.; Freier, Ronny; Grembi, Veronica; Nannicini, Tommaso

doi:10.2139/ssrn.2664464

Cited by 12 publications

(4 citation statements)

References 38 publications

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“…Consequently, around each cutoff, the municipalities are arbitrarily similar, with the only difference being their city-council sizes. q q q q q q q q q q qq q qq q qq q qq q qqq q q q q qq q q qq q q q q q q q q q q q q q q q q q q q q qq q q q q q q q q q q q q q q q q qq qqq q q q q qq q q qqq q q q q qq q q q qq q q q q qq q q q q q q q q q q q q q q q q q q q q q q q qq q q q q q q q q q qq q q qqq q q q q q q q q q q q q q q q q q q q q q q q q q q q q q q q q q q q q q q q q q q q q q qq qq q q q q q qq q q q q q q q q q q q q qq q q q q q q q q q q q q q q q q q qq q q q q q q qq q q q q qq q q q q q q q q q q q qq q q q q q q q q q qq q q q q q q q q q q q q q q q q q q q q q q qqq q q q q q q q q qq q qq q q qq q q q q q q q q q q q q q q q q q qq q q q q q q q q q q q qq q q q q qq q q q q qq q q q qq q q q q qq q q q q q q q q q q qq q q q q qq q q q q q q q q q q q q q q q q q q q q q q q q q q q q q q q q q q q q q q q qqq q q q q q q q q q q q q qq q q q qq q qq q q q q q q q qq qq q q q q q q q q q q q q q q q q q qq q q q q q q q q q qq q q q q qq q q q q q q q q q q q qq q q qq q q q q q q q q q qq q qq q q q q q q q q q q q q q qq q q q q q q q q q q q q q q qq q q q q q q q q q q q For the second assumption, we know that running RDD in multiple thresholds may lead to inconsistent estimates when there is an imbalance in the running variable's distribution around the cutoffs (Bertanha 2017;Eggers et al 2018). For example, in our dataset, we have twelve discontinuities, and at each threshold we have a sharp increase of one councilor, from 9 to 21.…”

Section: Empirical Strategymentioning

confidence: 99%

Legislature Size and Welfare: Evidence from Brazil

Mignozzetti¹,

Cepaluni²

2019

Preprint

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What is the effect of legislature size on public service provision? While the literature relates legislature size to representation and government expenditure, its implications for welfare remain understudied. In this paper, we investigate the effects of legislature size on welfare, exploiting exogenous changes in city-council size in Brazil between 2005 and 2008. We show that adding a legislator improves education and health care. However, the results prove true for the services that are believed to be highly salient to voters and are easiest to claim credit for. In this sense, education quality and preventive health care remain unaffected while primary school enrollment and infant mortality significantly improve. To investigate the mechanism, we surveyed former councilors and analyzed 346,553 bills proposed by municipalities in the period. This analysis largely corroborates our findings, showing that politicians prefer to provide private and local public goods. This paper has implications for the design of legislative institutions.

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Section: Empirical Strategymentioning

confidence: 99%

Legislature Size and Welfare: Evidence from Brazil

Mignozzetti¹,

Cepaluni²

2019

Preprint

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“…One potential critique of this approach is that, since population is a discrete variable any observations with lie exactly at the cut-off are automatically assigned to the first bin to the right of the threshold, which potentially biases the test statistic. Eggers et al (2015) suggest in this case running a McCrary test at the cut-off value of -0.5. In this case, the value of the test statistic θ is 0.335 with a standard error of 0.188 resulting in a p-velue of 0.0751, which further confirms that sorting is not an issue.…”

Section: The Empirical Approachmentioning

confidence: 99%

Do equalization payments affect subnational borrowing? Evidence from regression discontinuity

Köppl‐Turyna¹,

Pitlik

2018

European Journal of Political Economy

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According to the fiscal federalism literature sub-central budget constraints become softer when local governments are more dependent on revenues over which they have no discretion. As a consequence of higher 'transfer-dependency', sub-central governments can expect to be bailed out by the central government and therefore tend to accumulate higher levels of debt. We test this conjecture with data from Austrian municipalities. Austria is a fiscally highly centralized federation in which tax autonomy at the sub-central level is almost absent. Our identification strategy is based on a discontinuity caused by a special regulation on population weights in the tax sharing agreement between central government and the municipalities. We analyze the discontinuity in the conditional expectation of borrowing given population size to unveil an average causal effect of the treatment. Our results indicate that in line with theoretical expectations municipalities with higher revenue dependency observe higher net borrowing per capita. We also find that almost one half of the observed discontinuity works through an investment channel. Net borrowing is spatially correlated.

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“…1 Also see Eggers et al (2015) and Gerard et al (2015) for possible solutions for running variables with possible manipulation problems. Zipf 's Law (1949) According to Mendes (2008), the MPF is "a redistributive transfer.…”

Section: Introductionmentioning

confidence: 99%

Correcting the population of Brazilian municipalities using the Jackknife

Mattos¹,

Santos²

2018

Brazilian Review of Econometrics

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This paper proposes a method for identifying and correcting the observed distortion in the population distribution of Brazilian municipalities present in the Demographic Census data (Litschig, 2012 andMonasterio, 2014). This distortion is characterized by a high concentration of municipalities with populations close to the bands used as criteria for distributing funds to municipalities in Brazil (Municipal Participation Fund, MPF). The proposed method uses two steps. First, we follow Gabaix (1999) and use a model that follows Zipf's Law to estimate the population of cities (ZIPF, 1949), as in Monasterio (2014). Next, using the Jackknife method, which minimizes population deviations from the standard model, we identify the candidate municipalities for the adjustment and replace their population with the expected counterpart, so as not to present significant discontinuities in the population distribution (McCrary, 2008). We found no significant change in the MPF distribution after this correction, which suggests that the observed phenomenon of discontinuous population distribution is small and, more importantly, models using fuzzy RDD (Brollo et al 2011) cannot be completely invalidated.

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Regression Discontinuity Designs Based on Population Thresholds: Pitfalls and Solutions

Cited by 12 publications

References 38 publications

Legislature Size and Welfare: Evidence from Brazil

Legislature Size and Welfare: Evidence from Brazil

Do equalization payments affect subnational borrowing? Evidence from regression discontinuity

Correcting the population of Brazilian municipalities using the Jackknife

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