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Measuring the Impact of the European Regional Policy on Economic Growth: a Regression Discontinuity Design Approach

Author

Listed:
  • Busillo

    (Ministero dello Sviluppo Economico, Dipartimento per lo Sviluppo e la Coesione Economica)

  • Teo Muccigrosso

    (Ministero dello Sviluppo Economico, Dipartimento per lo Sviluppo e la Coesione Economica)

  • Guido Pellegrini

    (University of Rome ’La Sapienza’, Department of Public Economics (Italy))

  • Ornella Tarola

    (Department of Economic Theory - Sapienza University of Rome (Italy))

  • Terribile

    (Ministero dello Sviluppo Economico, Dipartimento per lo Sviluppo e la Coesione Economica)

Abstract

Given the increasing share of the EU budget devoted to Regional Policy, several studies have tried to identify the policy’s contribution to regional economic growth. However, so far no consensus has been reached on the effectiveness of Cohesion policy, due to both limitations in data availability and comparability at regional level, and the difficulties in isolating the effects of the policy from the confounding effect of other factors. The purpose of this paper is to assess the effectiveness of UE Regional Policy, using a counterfactual method - the regression discontinuity design (henceforth RDD). We exploit the allocation rule of regional UE transfer: regions with a per capita GDP level below 75% of the EU average receive a huge amount of UE structural funds transfers. The sharp RDD is based to the jump in the probability of EU transfer receipt at the 75% cut-off point. Comparing the economic scenario arising under policy interventions with a ‘counterfactual’ situation - what would have happened if the policies were not implemented - we identify the economic effect of European regional interventions and show that they are positive and statistically significant. The most part of the larger growth of Obj. 1 regions in the period 1995-2006 can be attributed to Regional Policy.

Suggested Citation

  • Busillo & Teo Muccigrosso & Guido Pellegrini & Ornella Tarola & Terribile, 2010. "Measuring the Impact of the European Regional Policy on Economic Growth: a Regression Discontinuity Design Approach," Working Papers 6/10, Sapienza University of Rome, DISS.
    • Handle: RePEc:saq:wpaper:6/10
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    Citations

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    Cited by:

    1. Tomasz Jałowiec & Henryk Wojtaszek & Ireneusz Miciuła, 2022. "Analysis of the Potential Management of the Low-Carbon Energy Transformation by 2050," Energies, MDPI, vol. 15(7), pages 1-29, March.
    2. Riccardo Crescenzi & Mara Giua, 2018. "One or Many Cohesion Policies of the European Union? On the Diverging Impacts of Cohesion Policy across Member States," SERC Discussion Papers 0230, Centre for Economic Performance, LSE.
    3. Cerina, Fabio & Mureddu, Francesco, 2014. "Is agglomeration really good for growth? Global efficiency, interregional equity and uneven growth," Journal of Urban Economics, Elsevier, vol. 84(C), pages 9-22.
    4. Emanuele Ciani & Guido de Blasio, 2015. "European structural funds during the crisis: evidence from Southern Italy," IZA Journal of Labor Policy, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 4(1), pages 1-31, December.
    5. Laurentiu Droj & Gabriela Droj, 2017. "Financial Sustainability For Romanian Companies - European Structural Funds Between Inter-Regional Cohesion Or Division? Part Ii," Annals of Faculty of Economics, University of Oradea, Faculty of Economics, vol. 1(1), pages 297-305, July.
    6. Guido Pellegrini & Augusto Cerqua, 2011. "Are the subsidies to private capital useful? A Multiple Regression Discontinuity Design Approach1," ERSA conference papers ersa11p1323, European Regional Science Association.
    7. Vera A. Adamchik & Thomas J. Hyclak, 2013. "The Evolution Of Regional Wage Differentials In A Transition Economy: Evidence From Poland," Global Journal of Business Research, The Institute for Business and Finance Research, vol. 7(5), pages 1-13.
    8. Mara Giua, 2014. "Spatial Discontinuity for the Impact Assessment of the EU Regional Policy. The Case of Italian Objective 1 Regions," Departmental Working Papers of Economics - University 'Roma Tre' 0197, Department of Economics - University Roma Tre.
    9. Marco Di Cataldo, 2015. "The long-term impact of Objective 1 funding on unemployment and labour market disparities: Evidence from the UK," ERSA conference papers ersa15p104, European Regional Science Association.
    10. Marco Di Cataldo, 2016. "Gaining and losing EU Objective 1 funds: Regional development in Britain and the prospect of Brexit," LEQS – LSE 'Europe in Question' Discussion Paper Series 120, European Institute, LSE.

    More about this item

    Keywords

    cohesion policy; regional growth; evaluation policy impact; regression discontinuity design.;
    All these keywords.

    JEL classification:

    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General

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