Causal Inference for Policy Evaluation – HS 2022

Conny Wunsch, Ulrike Unterhofer and Véra Zabrodina

Lab Assignment 4

Due: 23 November 2022, 23:59.

Questions
Regression discontinuity design
The following questions all relate to Meyersson (2014), and the corresponding provided
data.

1. You now want to implement a so-called donut hole approach, where you exclude
observations within a small range around the cutoff.

(a) Mention one reason why this could be necessary in the context of municipal
elections. (1 points)

(b) Estimate the effect of Islamic rule on female high-school completion rates.
First, exclude observations with win margins within a range r around the cutoff.
Second, estimate the effect using a nonparametric estimation (local linear re-
gression) with covariates, a polynomial of order 1, a triangular kernel, and data-
driven bandwidth selection. Replicate this for r ∈ {0, 0.1, 0.2, 0.3, 0.4, 0.5}. Re-
port the effect estimates in one graph, along with 95% confidence intervals. (4
points)

(c) Discuss the results. Is the RD effect estimate sensitive to observations near
the cut-off? (2 points)

2. You still want to estimate the effect of Islamic rule on the educational outcomes of
women. However, now imagine a different political setting. There was no election
in 1994. Instead, the Islamic party organised a coup and unexpectedly put in place
Islamic mayors in the municipalities in the North West of Turkey. In your answers,
you can assume that the rest of the municipalities remained under secular rule, and
everywhere political institutions remained otherwise unchanged. Also, that there
was no Islamic rule anywhere before.

Imagine you have data on the geographical coordinates of the center of each mu-
nicipality, as well as of the border of the area controlled by the Islamic party. You
can thus compute the distance between each municipality center and the Islamic

1
 border.

Describe how a geographical regression discontinuity design could be implemented

to identify the effect of interest. Specifically,

(a) What are the treated and the control groups? (1 point)

(b) What is the running variable? (1 point)

(c) How is the treatment assigned as a function of the running variable, in this
specific set up? (1 points)

(d) Discuss the plausibility of the identifying assumptions in this alternative set
up. (4 points)

Difference-in-Differences

3. Reading for the next lab session: Hjort and Poulsen (2019), you can skip Sections
IV.E and IV.F, Section V, and Section VI.

(a) What is the treatment? (1 points)

(b) What is the (main) definition of the treated and control groups? (2 points)

(c) Why would comparing the average outcomes of the treated and control groups
result in a biased estimate of the treatment effect? Shortly discuss, in your
own words, what the endogeneity problem is. (3 points)

Note that the replication will focus on the South Africa Quarterly Labor Force
Survey (SA-QLFS) dataset and the corresponding results only.

Submission: Please send your written solutions as well as any code used to generate the
answers to ulrike.unterhofer@unibas.ch. The written answers including outputs such
as tables and graphs should be saved as a PDF file, and are limited to a maximum of 2
pages (12 points, single spacing). Any text beyond that will not be considered.

Please refer to the Lab sessions’ syllabus for further details.