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Treatment Effects in Bunching Designs: The Impact of Mandatory Overtime Pay on Hours

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  • Leonard Goff

Abstract

This paper studies the identifying power of bunching at kinks when the researcher does not assume a parametric choice model. I find that in a general choice model, identifying the average causal response to the policy switch at a kink amounts to confronting two extrapolation problems, each about the distribution of a counterfactual choice that is observed only in a censored manner. I apply this insight to partially identify the effect of overtime pay regulation on the hours of U.S. workers using administrative payroll data, assuming that each distribution satisfies a weak non-parametric shape constraint in the region where it is not observed. The resulting bounds are informative and indicate a relatively small elasticity of demand for weekly hours, addressing a long-standing question about the causal effects of the overtime mandate.

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  • Leonard Goff, 2022. "Treatment Effects in Bunching Designs: The Impact of Mandatory Overtime Pay on Hours," Papers 2205.10310, arXiv.org, revised Jun 2024.
    • Handle: RePEc:arx:papers:2205.10310
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    Cited by:

    1. Leonard Goff, 2022. "Identifying causal effects with subjective ordinal outcomes," Papers 2212.14622, arXiv.org, revised Jan 2025.
    2. Myunghyun Song, 2024. "Identification and Inference in General Bunching Designs," Papers 2411.03625, arXiv.org, revised Feb 2025.

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