Reference no: EM133303607

Pinotti (2017) studies the effect of immigrant legalization on the crime rate of immigrants in Italy. Author uses ?xed quotas of residence permits that are available each year, applications are submitted electronically on speci?c days, and are processed on a ?rst come, ?rst served basis until the available quotas are exhausted. Crucial to this study, applicants do not know when quotas are exhausted. For example, if there are 4000 permits and 10,000 applicants, all 10,000 applications are ranked in chronological order with the ?rst 4,000 being granted residence permits and the 4001th not receiving it.

(1) Do you think that comparing crime rates of immigrants who were granted residence per- mits with those who don't will uncover the causal effects of residence permits on crime? Why?

(2) Using a regression disconinuity design, how can you estimate the impact of residence permits on crime? Make sure to write down a model

(Hint: Think about who narrowly gets the permit and who narrowly misses it)

(3) If immigrants can manipulate the visa permit process shall we be concerned about internal validity? Assume that immigrants more determined to work and less likely to commit crimes bribe authorities to get visa permits, is our estimator underestimating or overestimating the e?ect of the policy?