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Including Covariates in the Regression Discontinuity Design

Author

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  • Frölich, Markus

    (University of Mannheim)

  • Huber, Martin

    (University of Fribourg)

Abstract

This paper proposes a fully nonparametric kernel method to account for observed covariates in regression discontinuity designs (RDD), which may increase precision of treatment effect estimation. It is shown that conditioning on covariates reduces the asymptotic variance and allows estimating the treatment effect at the rate of one-dimensional nonparametric regression, irrespective of the dimension of the continuously distributed elements in the conditioning set. Furthermore, the proposed method may decrease bias and restore identification by controlling for discontinuities in the covariate distribution at the discontinuity threshold, provided that all relevant discontinuously distributed variables are controlled for. To illustrate the estimation approach and its properties, we provide a simulation study and an empirical application to an Austrian labor market reform.

Suggested Citation

  • Frölich, Markus & Huber, Martin, 2017. "Including Covariates in the Regression Discontinuity Design," IZA Discussion Papers 11138, IZA Network @ LISER.
    • Handle: RePEc:iza:izadps:dp11138
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    References listed on IDEAS

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    Keywords

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    JEL classification:

    • C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General
    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models

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