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Regression Kink Design: Theory and Practice

In: Regression Discontinuity Designs

Author

Listed:
  • David Card
  • David S. Lee
  • Zhuan Pei
  • Andrea Weber

Abstract

A regression kink design (RKD or RK design) can be used to identify casual effects in settings where the regressor of interest is a kinked function of an assignment variable. In this chapter, we apply an RKD approach to study the effect of unemployment benefits on the duration of joblessness in Austria, and discuss implementation issues that may arise in similar settings, including the use of bandwidth selection algorithms and bias-correction procedures. Although recent developments in nonparametric estimation (Calonico, Cattaneo, & Farrell, 2014; Imbens & Kalyanaraman, 2012) are sometimes interpreted by practitioners as pointing to a default estimation procedure, we show that in any given application different procedures may perform better or worse. In particular, Monte Carlo simulations based on data-generating processes that closely resemble the data from our application show that some asymptotically dominant procedures may actually perform worse than “sub-optimal” alternatives in a given empirical application.

Suggested Citation

  • David Card & David S. Lee & Zhuan Pei & Andrea Weber, 2017. "Regression Kink Design: Theory and Practice," Advances in Econometrics, in: Regression Discontinuity Designs, volume 38, pages 341-382, Emerald Group Publishing Limited.
    • Handle: RePEc:eme:aecozz:s0731-905320170000038016
    DOI: 10.1108/S0731-905320170000038016
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    More about this item

    JEL classification:

    • C2 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables
    • J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings

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