Miren Lafourcade attended the 12th European Meeting of the Urban Economics Association, held at the Bocconi University, Milan, Italy, on May 5-6, 2023.
She presented her paper “Place-Based Policies: Opportunity for Deprived Schools or Zone-and-Shame Effect?”, co-authored with Manon Garrouste.
Abstract: Even though place-based policies involve large transfers toward low-income neighborhoods, they may also produce territorial stigmatization. This paper appeals to the quasi-experimental discontinuity in a French reform that redrew the zoning map of subsidized neighborhoods on the basis of a sharp poverty cut-off to assess the effect of place-based policies on school enrollment into lower secondary education. Using a difference-in-differences approach, we find strong evidence of stigma from policy designation, as public middle schools in neighborhoods below the policy cut-off, which qualified for place-based subsidies, saw a significant 3.5 percentage points post-reform drop in pupil enrollment, compared to their counterfactual analogues in unlabeled areas lying just above the poverty threshold. This “zone-and-shame” effect is immediate but short-lived, as it is only found for the first pupil-entry cohort in middle schools immediately after the reform. We show that it was triggered by the reactions of parents from all socioeconomic backgrounds, who avoided public schools in policy areas and shifted to those in other areas or, only for richer parents, to private schools. We uncover, on the contrary, only weak evidence of stigma reversion after an area loses its designation, suggesting hysteresis in bad reputations.