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The effect of business support on employment in manufacturing: evidence from the EU structural funds in Germany, Italy, and Spain

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  • Massimo FLORIO
  • Luigi MORETTI

Abstract

This study investigates whether a relationship exists between European Cohesion Policy support to business activities and the growth of employment. We exploit cross-industry cross-region variations for a sample of 14 manufacturing industries and 70 European regions (belonging to Germany, Spain, and Italy), and take advantage of detailed EU Structural and Cohesion Funds data available at the regional level for the period 2000-2006. We show that there are differential effects of business support on industries with different initial size as well as with different growth opportunities. The results imply that the European Cohesion Policy’s direct support to businesses might contribute to the process of reallocation of persons employed across industries. Since estimated effects at the aggregate level might conceal large differences across industries, by disentangling the effects across industries we can improve our understanding of how the Structural Funds support can impact industrial and regional development and adjustment paths.

Suggested Citation

  • Massimo FLORIO & Luigi MORETTI, 2009. "The effect of business support on employment in manufacturing: evidence from the EU structural funds in Germany, Italy, and Spain," Departmental Working Papers 2009-33, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.
    • Handle: RePEc:mil:wpdepa:2009-33
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    1. Sjef Ederveen & Henri L.F. de Groot & Richard Nahuis, 2006. "Fertile Soil for Structural Funds?A Panel Data Analysis of the Conditional Effectiveness of European Cohesion Policy," Kyklos, Wiley Blackwell, vol. 59(1), pages 17-42, February.
    2. Bernard G. Funck & Lodovico Pizzati, 2003. "European Integration, Regional Policy, and Growth," World Bank Publications - Books, The World Bank Group, number 15144, December.
    3. Becker, Sascha O. & Egger, Peter H. & von Ehrlich, Maximilian, 2010. "Going NUTS: The effect of EU Structural Funds on regional performance," Journal of Public Economics, Elsevier, vol. 94(9-10), pages 578-590, October.
    4. Andres RodrIguez-Pose & Ugo Fratesi†, 2004. "Between Development and Social Policies: The Impact of European Structural Funds in Objective 1 Regions," Regional Studies, Taylor & Francis Journals, vol. 38(1), pages 97-113.
    5. Raymond Fisman & Inessa Love, 2004. "Financial Development and Intersectoral Allocation: A New Approach," Journal of Finance, American Finance Association, vol. 59(6), pages 2785-2807, December.
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    7. Davide Fiaschi & Andrea Mario Lavezzi & Angela Parenti, 2009. "Productivity Dynamics across European Regions: the Impact of Structural and Cohesion Funds," Discussion Papers 2009/84, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.
    8. Aadne Cappelen & Fulvio Castellacci & Jan Fagerberg & Bart Verspagen, 2003. "The Impact of EU Regional Support on Growth and Convergence in the European Union," Journal of Common Market Studies, Wiley Blackwell, vol. 41(4), pages 621-644, September.
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    Cited by:

    1. Magnus Wiberg, 2015. "The comparative political economy of the location of industry," Canadian Journal of Economics, Canadian Economics Association, vol. 48(1), pages 134-154, February.
    2. Massimo Florio & Julie Pellegrin & Emanuela Sirtori, 2014. "Research intensive clusters and regional innovation systems: a case study of mechatronics in Apulia," Working Papers 201403, CSIL Centre for Industrial Studies.
    3. Magnus Wiberg, 2015. "The comparative political economy of the location of industry," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 48(1), pages 134-154, February.
    4. Chiara Del Bo & Massimo Florio & Silvia Vignetti & Emanuela Sirtori, 2011. "Additionality and regional development: are EU Structural Funds complements or substitutes of national Public Finance?," Working Papers 201101, CSIL Centre for Industrial Studies.

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    More about this item

    Keywords

    EU Cohesion Policy; Structural Funds; Growth Opportunities;
    All these keywords.

    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • R58 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Regional Development Planning and Policy

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