EU Cohesion Policies between Effectiveness and Equity: An Analysis of Italian Municipalities

The allocation of funds to finance cohesion policies has been a significant European and national level activity. We focus on the 2007-2013 and 2014-2020 programming periods within a 23-year (2000 to 2022) time frame to assess whether and how cohesion funds have affected per-capita income growth rates in the municipalities in the Objective 1 Italian regions of Calabria, Campania, Apulia, and Sicily. We use static and dynamic difference-in-differences methodologies. Municipal level examination allows us to filter out the distorting effects generated by characteristics typical of those countries whose regions have benefited from the allocation of structural funding. The literature shows that structural funding causes contrasting effects on various economic variables. We found significant increases in municipal per-capita income growth rates in the treated compared to the control group of municipalities, with increased effects starting from the 10th year after the first payment. We interpret our results in terms of income inequality; we show that funding causes a rise in both the Gini and Atkinson inequality indexes. This suggests that while EU cohesion funds have been effective for promoting income growth, they have not improved equity.