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Local policy effects at a time of economic crisis

Author

Listed:
  • Cerqua, Augusto
  • Pellegrini, Guido
Abstract
Regional inequalities are large and have widened during the Great Recession. As they prompt people and economic activities to migrate from lagging regions, central governments around the world transfer large amounts of resources in order to prevent these phenomena from occurring. In this paper, we evaluate the effectiveness of the most extensive and long-lived experiment of income redistribution across regions and countries, i.e., the EU regional policy, at a time of economic crisis. Exploiting geographic discontinuities in funds eligibility and using a spatial regression discontinuity design, we analyze comprehensive data on all publicly funded Italian projects at the municipality level. We find a positive and significant impact on employment and number of plants in the least developed regions. However, the impact turns largely negligible when the gap between more and less intensively treated areas is relatively small. Moreover, the EU regional policy appears not to have had any effect on local average income.

Suggested Citation

  • Cerqua, Augusto & Pellegrini, Guido, 2018. "Local policy effects at a time of economic crisis," MPRA Paper 85621, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:85621
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    References listed on IDEAS

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    Cited by:

    1. Paolo Di Caro & Roberta Arbolino & Ugo Marani, 2018. "A note on the effects of human capital policies in Italy during the Great Recession," Economics Bulletin, AccessEcon, vol. 38(3), pages 1302-1312.
    2. Cerciello, Massimiliano & Agovino, Massimiliano & Garofalo, Antonio, 2019. "The caring hand that cripples? The effects of the European regional policy on local labour market participation in Southern Italy," Socio-Economic Planning Sciences, Elsevier, vol. 68(C).
    3. Bachtrögler-Unger, Julia & Dolls, Mathias & Krolage, Carla & Schüle, Paul & Taubenböck, Hannes & Weigand, Matthias, 2023. "EU cohesion policy on the ground: Analyzing small-scale effects using satellite data," Regional Science and Urban Economics, Elsevier, vol. 103(C).
    4. Giuseppe Albanese & Guido de Blasio & Andrea Locatelli, 2021. "Does EU regional policy promote local TFP growth? Evidence from the Italian Mezzogiorno," Papers in Regional Science, Wiley Blackwell, vol. 100(2), pages 327-348, April.
    5. Arbolino, Roberta & Caro, Paolo Di, 2021. "Can the EU funds promote regional resilience at time of Covid-19? Insights from the Great Recession11We thank the Editors and the four anonymous referees for helpful comments. We also thank Emanuele C," Journal of Policy Modeling, Elsevier, vol. 43(1), pages 109-126.

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    More about this item

    Keywords

    EU regional policy; spatial regression discontinuity design; recession; municipalities;
    All these keywords.

    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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