Place-Based Policies: Opportunity for Deprived Schools or Zone-and-Shame Effect?

Even though place-based policies involve large transfers toward low-income neighborhoods, they may also produce territorial stigmatization by putting the targeted areas in the spotlight. This paper appeals to the quasi-experimental discontinuity in a French reform that redrew the zoning map of subsidized neighborhoods on the basis of a sharp poverty cut-off to assess the effect of place-based policies on school outcomes. Using a difference-in-differences approach, we find strong evidence of stigma effects from policy designation on public middle schools located in neighborhoods below the policy cut-off, which saw a significant decrease in their post-reform pupil enrollment compared to their counterfactual analogues in unlabeled areas lying just above the poverty threshold. This "zone-and-shame" effect is immediate, it persists up to five years after the reform, and it is triggered by the reactions of parents from all socioeconomic backgrounds, who avoided public schools in policy areas and shifted to those in other areas or, only for richer parents, to private schools. There is also evidence of a short-lived decrease in pupils' test-scores associated with this spatial resorting. We uncover, on the contrary, only weak evidence of stigma reversion after an area loses its designation, suggesting hysteresis in bad reputations conveyed by policy labeling.