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A cost-benefit approach to the evaluation of regional selective assistance

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  • Kim Swales

Abstract

The ‘Green Book’ and the recent EGRUP report support exchequer cost per job as a key input in the ex-ante appraisal of individual applications for Regional Selective Assistance (RSA) and the ex-post evaluation of the RSA scheme as a whole. In this paper, following a recommendation in the House of Commons Trade and Industry Committee’s report on regional policy, the merits of an alternative, explicitly cost-benefit, framework are outlined. This approach incorporates the administration and compliance costs of the subsidy, costs at present ignored in RSA evaluation studies. An optimal ex-ante appraisal rule is developed. This takes the form of a cost-per-job ceiling, and a representative value is calculated for this figure.

Suggested Citation

  • Kim Swales, 1997. "A cost-benefit approach to the evaluation of regional selective assistance," Fiscal Studies, Institute for Fiscal Studies, vol. 18(1), pages 73-85, February.
    • Handle: RePEc:ifs:fistud:v:18:y:1997:i:1:p:73-85
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    File URL: http://www.ifs.org.uk/fs/articles/fsswales.pdf
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    References listed on IDEAS

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    1. Ashcroft, Brian & Swales, J. K., 1982. "Estimating the effects of government office dispersal : An application of demand constrained shadow wages," Regional Science and Urban Economics, Elsevier, vol. 12(1), pages 81-97, February.
    2. Hare, Paul G, 1975. "Regional Investment Criteria and Shadow Wage Rates," Scottish Journal of Political Economy, Scottish Economic Society, vol. 22(3), pages 305-320, November.
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    Cited by:

    1. David Brooksbank & David Pickernell, 2001. "Changing the Name of the Game? RSA, Indigenous and Inward Investors and the National Assembly for Wales," Regional Studies, Taylor & Francis Journals, vol. 35(3), pages 271-277.
    2. Devereux, Michael P. & Griffith, Rachel & Simpson, Helen, 2007. "Firm location decisions, regional grants and agglomeration externalities," Journal of Public Economics, Elsevier, vol. 91(3-4), pages 413-435, April.
    3. Munday, Max & Pickernell, David & Roberts, Annette, 1999. "The Effectiveness of Regional Grant Aid: A Welsh Perspective," ERSA conference papers ersa99pa321, European Regional Science Association.
    4. Felsenstein, Daniel & Fleischer, Aliza, 1999. "Capital Assistance and Small Firm Growth: Implications for Regional Economic Welfare," ERSA conference papers ersa99pa395, European Regional Science Association.
    5. Michael Devereux & Rachel Griffith & Helen Simpson, 2004. "Agglomeration, regional grants and firm location," IFS Working Papers W04/06, Institute for Fiscal Studies.
    6. Kim Swales, 2008. "The Relative Efficiency of Automatic and Discretionary Industrial Aid," Working Papers 0812, University of Strathclyde Business School, Department of Economics.
    7. Michael Keane & Eoghan Garvey, 2006. "Measuring the employment effects of the rural renewal tax scheme," Regional Studies, Taylor & Francis Journals, vol. 40(3), pages 359-374.
    8. Harald Lang & Armin-D. Riess, 2019. "Shadow wages in cost-benefit rules for project and policy analyses: estimates for OECD countries," DEM Discussion Paper Series 19-05, Department of Economics at the University of Luxembourg.
    9. John B Parr, 2015. "Neglected Aspects of Regional Policy: A Retrospective View," Environment and Planning C, , vol. 33(2), pages 376-392, April.
    10. Dimitris Skuras & Nick Tzamarias, 2000. "Job Creation by Assisted Rural Firms: a European North-South Perspective," Local Economy, London South Bank University, vol. 15(3), pages 225-237, September.
    11. J Kim Swales, 2010. "The Relative Efficiency of Automatic and Discretionary Regional Aid," Environment and Planning A, , vol. 42(2), pages 434-451, February.

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    JEL classification:

    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General

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