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European funds and firm performance: Evidence from a natural experiment

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  • Gabriel, José Mesquita
  • dos Santos, João Pereira
  • Tavares, José

Abstract

Expanding regional eligibility in the access to grants can have important consequences for the performance of firms. We examine a quasi-natural experiment that consisted of a redrawing of administrative areas intended to increase accessibility to European Union (EU) funds using a rich administrative dataset that covers the universe of Portuguese private firms between 2003 and 2010. Our results uncover a positive causal impact of increased eligibility on firms' sales. In contrast, employment and labour productivity do not seem to be significantly impacted by the reform. The effects are heterogeneous: while sales of firms in the services and non-tradable sectors are positively impacted, sales of firms in more competitive sectors are not affected.

Suggested Citation

  • Gabriel, José Mesquita & dos Santos, João Pereira & Tavares, José, 2022. "European funds and firm performance: Evidence from a natural experiment," Ruhr Economic Papers 966, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    • Handle: RePEc:zbw:rwirep:966
    DOI: 10.4419/96973130
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    Cited by:

    1. Alexandre, Fernando & Chaves, Miguel & Portela, Miguel, 2022. "Investment Grants and Firms' Productivity: How Effective Is a Grant Booster Shot?," IZA Discussion Papers 15779, Institute of Labor Economics (IZA).

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    More about this item

    Keywords

    Grants; regional policy; private firm; municipalities; Portugal;
    All these keywords.

    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • R10 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General

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