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On the Optimal Design of Place-Based Policies: A Structural Evaluation of EU Regional Transfers

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  • Yashar Blouri
  • Maximilian von Ehrlich

Abstract

We quantify general equilibrium effects of place-based policies in a multi-region framework with mobility, trade and agglomeration economies. Using detailed data on EU transfers, we infer the local effects of different transfer types on productivity, income and transportation cost. Based on these estimates and the general equilibrium model we derive the spatial distribution of economic activity and the resulting aggregate welfare effects if (i) no transfers were paid and taxes set to zero, (ii) transfers were distributed uniformly, (iii) transfers were welfare-optimally distributed. Characterizing the optimal distributions, we reveal complementarities between transfer types and between transfers and local endowments.

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  • Yashar Blouri & Maximilian von Ehrlich, 2017. "On the Optimal Design of Place-Based Policies: A Structural Evaluation of EU Regional Transfers," CESifo Working Paper Series 6742, CESifo.
    • Handle: RePEc:ces:ceswps:_6742
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    3. Xiameng Pan & Chang Sun, 2023. "Internal Migration, Remittances and Economic Development," CESifo Working Paper Series 10623, CESifo.
    4. Naoki Tani & Yuki Uemura, 2023. "General Equilibrium Analysis of Fiscal Transfers in an Aging Society," KIER Working Papers 1093, Kyoto University, Institute of Economic Research.
    5. Crucitti, Francesca & Lazarou, Nicholas-Joseph & Monfort, Philippe & Salotti, Simone, 2023. "Where does the EU cohesion policy produce its benefits? A model analysis of the international spillovers generated by the policy," Economic Systems, Elsevier, vol. 47(3).
    6. Ferrara, Antonella Rita & Dijkstra, Lewis & McCann, Philip & Nisticó, Rosanna, 2022. "The response of regional well-being to place-based policy interventions," Regional Science and Urban Economics, Elsevier, vol. 97(C).

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    More about this item

    Keywords

    economic geography; place-based policies; structural estimation subsidies; public investments; European structural funds;
    All these keywords.

    JEL classification:

    • R10 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General
    • R50 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - General
    • F10 - International Economics - - Trade - - - General
    • F20 - International Economics - - International Factor Movements and International Business - - - General
    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General

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