Sorting Around the Discontinuity Threshold: The Case of a Neighbourhood Investment Programme

Abstract

This paper investigates the empirical validity of the setup of a large-scale government neighbourhood investment programme in the Netherlands. Selection of neighbourhoods into the programme was determined by a measure of neighbourhood quality. At first sight this is a textbook example for the application of a regression discontinuity design to estimate the causal effect of the programme on neighbourhood outcomes. Neighbourhoods close to the threshold should be similar before the programme starts. However, at the discontinuity threshold we observe a surprisingly large gap in the share of non-Western immigrants between neighbourhoods that were selected into the programme and neighbourhoods that were not. In addition, there is non-compliance with the assignment rule based on the quality index. The pattern We thank two referees of this journal, Josh Angrist, Casper van Ewijk, Erzo Luttmer, Justin McCrary, Coen Teulings and participants at several seminars for helpful comments and discussions. We also benefited useful discussions about the neighbourhood programme with representatives from the Dutch Ministry of the Interior and Kingdom Relations and the Dutch Ministry of Ministry of Health, Welfare and Sports. Special thanks to Gerard Verweij for constructing the graphs in this paper. We would like to thank Joost Smits for access to the election data. of non-compliance is consistent with investing in neighbourhoods with a high share of non-Western immigrants. Finally, the way in which neighbourhoods were defined could be a likely explanation for the imbalance in the share of non-Western immigrants at the discontinuity threshold.

Place-Based Policies and the Housing Market

“…These results (available upon request) are essentially identical if we use higher-order polynomials.20 Gerritsen et al (2017) provide some evidence that the share foreigners (in levels) may be discrete at the z-score threshold. Because we investigate the effect of the change in the treatment on the change in house prices this is not a major problem.…”

“…This is also confirmed when looking at the results for sales time in columns (5) and (6). Gerritsen et al (2017) provide some evidence that the share foreigners (in levels) is discrete at the z-score threshold. One may then suspect that the change in the share of foreigners is then endogenous if the change in the share foreigners is correlated to the level (see e.g.…”