Bounds on Treatment Effects in Regression Discontinuity Designs Under Manipulation of the Running Variable, with an Application to Unemployment Insurance in Brazil

79 Pages Posted: 29 Nov 2016

See all articles by Francois Gerard

Francois Gerard

Columbia University - Graduate School of Arts and Sciences - Department of Economics

Miikka Rokkanen

Columbia University

Christoph Rothe

Columbia University

Date Written: November 2016

Abstract

A key assumption in regression discontinuity analysis is that units cannot affect the value of their running variable through strategic behavior, or manipulation, in a way that leads to sorting on unobservable characteristics around the cutoff. Standard identification arguments break down if this condition is violated. This paper shows that treatment effects remain partially identified under weak assumptions on individuals' behavior in this case. We derive sharp bounds on causal parameters for both sharp and fuzzy designs, and show how additional structure can be used to further narrow the bounds. We use our methods to study the disincentive effect of unemployment insurance on (formal) reemployment in Brazil, where we find evidence of manipulation at an eligibility cutoff. Our bounds remain informative, despite the fact that manipulation has a sizable effect on our estimates of causal parameters.

Keywords: manipulation, Regression Discontinuity, Unemployment insurance

JEL Classification: C14, C21, C31, J65

Suggested Citation

Gerard, Francois and Rokkanen, Miikka and Rothe, Christoph, Bounds on Treatment Effects in Regression Discontinuity Designs Under Manipulation of the Running Variable, with an Application to Unemployment Insurance in Brazil (November 2016). CEPR Discussion Paper No. DP11668, Available at SSRN: https://ssrn.com/abstract=2877273

Francois Gerard (Contact Author)

Columbia University - Graduate School of Arts and Sciences - Department of Economics ( email )

420 W. 118th Street
New York, NY 10027
United States

Miikka Rokkanen

Columbia University ( email )

3022 Broadway
New York, NY 10027
United States

Christoph Rothe

Columbia University ( email )

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