Heterogeneous Effects of Place-Based Policies and a Practical Treatment Assignment Rule

We empirically assess the treatment effects of a place-based policy in Japan and propose a socially desirable and practically feasible treatment assignment rule for the program. To account for heterogeneity of treatment effects, we estimate the conditional average treatment effect for each region using a marginal treatment effects framework and construct treatment rules based on regional characteristics such as demography, degree of suburbanization, and local production network. Our results indicate that targeting cities where the number of household cars and the share of the elderly population are moderate is the most appropriate for improving per-worker retail sales