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Putting Structure on the RD Design: Social Transfers and Youth Inactivity in France

Author

Listed:
  • Olivier Bargain

    (GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique, IZA - Institute for the Study of Labor)

  • Karina Doorley

    (IZA - Institute for the Study of Labor, CEPS/INSTEAD - CEPS/INSTEAD)

Abstract
Natural experiments provide explicit and robust identifying assumptions for the estimation of treatment effects. Yet their use for policy design is often limited by the difficulty in extrapolating on the basis of reduced-form estimates of policy effects. On the contrary, structural models allow us to conduct ex ante policy analysis but their internal validity is often questioned. In this paper, we suggest combining the two approaches by putting structure on a regression discontinuity (RD) design. We start with a RD estimation, exploiting the fact that childless single individuals under 25 years of age are not eligible for social assistance in France. A behavioral model is then identified using the same age discontinuity. While this model replicates well the employment effect obtained by RD, it can also be used to predict actual policy reforms and, hence, to check external validity. Showing good performances in this regard, it is finally used to simulate important counterfactual policies, namely the extension of social assistance to young people and the employment effects of a large in-work benefit reform.

Suggested Citation

  • Olivier Bargain & Karina Doorley, 2014. "Putting Structure on the RD Design: Social Transfers and Youth Inactivity in France," Working Papers halshs-00967329, HAL.
    • Handle: RePEc:hal:wpaper:halshs-00967329
    Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00967329
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    References listed on IDEAS

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    Cited by:

    1. Pierre Cahuc & Stéphane Carcillo & Ulf Rinne & Klaus Zimmermann, 2013. "Youth unemployment in old Europe: the polar cases of France and Germany," IZA Journal of European Labor Studies, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 2(1), pages 1-23, December.
    2. Massimiliano Bratti & Corinna Ghirelli & Enkelejda Havari & Giulia Santangelo, 2022. "Vocational training for unemployed youth in Latvia," Journal of Population Economics, Springer;European Society for Population Economics, vol. 35(2), pages 677-717, April.
    3. Rolf Aaberge & Ugo Colombino, 2014. "Labour Supply Models," Contributions to Economic Analysis, in: Handbook of Microsimulation Modelling, volume 127, pages 167-221, Emerald Group Publishing Limited.
    4. Olivier Bargain & Andreas Peichl, 2016. "Own-wage labor supply elasticities: variation across time and estimation methods," IZA Journal of Labor Economics, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 5(1), pages 1-31, December.
    5. Hong Kai, 2017. "School Bond Referendum, Capital Expenditure, and Student Achievement," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 17(4), pages 1-26, October.
    6. Luciano Canova & Luca Piccoli & Amedeo Spadaro, 2015. "An ex ante evaluation of the Revenu de Solidarité Active by micro–macro simulation techniques," IZA Journal of European Labor Studies, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 4(1), pages 1-20, December.

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    More about this item

    Keywords

    behavioral model; regression discontinuity; labor supply;
    All these keywords.

    JEL classification:

    • C52 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Evaluation, Validation, and Selection
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

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