Regional Policy Evaluation:Interactive Fixed Effects and Synthetic Controls

Gobillon, Laurent; Magnac, Thierry

Regional Policy Evaluation:Interactive Fixed Effects and Synthetic Controls

No 13-419, TSE Working Papers from Toulouse School of Economics (TSE)

Abstract: In this paper, we investigate the use of interactive effect or linear factor models in regional policy evaluation. We contrast treatment effect estimates obtained by Bai (2009)'s least squares method with the popular difference in difference estimates as well as with estimates obtained using synthetic control approaches as developed by Abadie and coauthors. We show that difference in differences are generically biased and we derive the support conditions that are required for the application of synthetic controls. We construct an extensive set of Monte Carlo experiments to compare the performance of these estimation methods in small samples. As an empirical illustration, we also apply them to the evaluation of the impact on local unemployment of an enterprise zone policy implemented in France in the 1990s.

Keywords: Policy evaluation; Linear factor models; Synthetic controls; Economic geography; Enterprise zones (search for similar items in EconPapers)
Date: 2013-07
New Economics Papers: this item is included in nep-ecm and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

Downloads: (external link)
http://www.tse-fr.eu/sites/default/files/medias/doc/wp/etrie/wp_tse_419.pdf Full text (application/pdf)

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:tse:wpaper:27409

Access Statistics for this paper

More papers in TSE Working Papers from Toulouse School of Economics (TSE) Contact information at EDIRC.
Bibliographic data for series maintained by ().