Question 3: Regression Discontinuity Design

We are interested in evaluating the impact of welfare payments on individuals' employment rate. We have data from a country where the government gives significantly lower welfare payments to individuals under 30 and without children than those who are older than 30. As a researcher, you implement a regression discontinuity design (RDD) for your evaluation.

The following figure presents graphical evidence for our finding that welfare payments reduce the employment rate of individuals.

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