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Difference-in-Kinks Design

Author

Listed:
  • Böckerman, Petri

    (University of Jyväskylä)

  • Jysmä, Sami

    (Labour Institute for Economic Research)

  • Kanninen, Ohto

    (LABORE Labour Institute for Economic Research)

Abstract

This paper introduces the Difference-in-Kinks (DiK) design, an econometric framework that extends the standard regression kink design to settings in which the slope of a policy rule varies over time. By combining the key features of the regression kink and difference-in-differences approaches, the DiK design identifies causal effects from variation in kink intensity over time. We formalize both sharp and fuzzy versions of the estimator and derive the identification conditions under a parallel-trends assumption. Applying DiK to Finland’s 2011 guarantee pension reform demonstrates that changes in marginal incentives significantly increased the probability of retirement, while the standard regression kink design would have obtained implausibly large estimates in the opposite direction. The DiK design thus offers a flexible framework for policy evaluation in dynamic, nonlinear environments.

Suggested Citation

  • Böckerman, Petri & Jysmä, Sami & Kanninen, Ohto, 2025. "Difference-in-Kinks Design," IZA Discussion Papers 18313, IZA Network @ LISER.
    • Handle: RePEc:iza:izadps:dp18313
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    References listed on IDEAS

    as
    1. Jonas Kolsrud & Camille Landais & Daniel Reck & Johannes Spinnewijn, 2024. "Retirement Consumption and Pension Design," American Economic Review, American Economic Association, vol. 114(1), pages 89-133, January.
    2. Gruber, Jonathan & Kanninen, Ohto & Ravaska, Terhi, 2022. "Relabeling, retirement and regret," Journal of Public Economics, Elsevier, vol. 211(C).
    Full references (including those not matched with items on IDEAS)

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    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies

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