Going NUTS: The Effect of EU Structural Funds on Regional Performance
AbstractThe European Union (EU) provides grants to disadvantaged regions of member states to allow them to catch up with the EU average. Under the Objective 1 scheme, NUTS2 regions with a GDP per capita level below 75% of the EU average qualify for structural funds transfers from the central EU budget. This rule gives rise to a regression-discontinuity design that exploits the discrete jump in the probability of EU transfer receipt at the 75% threshold. Additional variability arises for smaller regional aggregates - so-called NUTS3 regions - which are nested in a NUTS2 mother region. Whereas some relatively rich NUTS3 regions may receive EU funds because their NUTS2 mother region qualifies, other relatively poor NUTS3 regions may not receive EU funds because their NUTS2 mother region does not qualify. We find positive growth effects of Objective 1 funds, but no employment effects. A simple cost-benefit calculation suggests that Objective 1 transfers are not only effective, but also cost-efficient.
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Bibliographic InfoPaper provided by University of Stirling, Division of Economics in its series Stirling Economics Discussion Papers with number 2008-27.
Date of creation: Nov 2008
Date of revision:
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Postal: Division of Economics, University of Stirling, Stirling, Scotland FK9 4LA
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Structural funds; Regional growth; Regression discontinuity design; Quasi-randomized experiment;
Other versions of this item:
- 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.
- Sascha O. Becker & Peter Egger & Maximilian Von Ehrlich & Robert Fenge, 2008. "Going NUTS: The Effect of EU Structural Funds on Regional Performance," CESifo Working Paper Series 2495, CESifo Group Munich.
- C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
- H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
- O40 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
- R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-12-01 (All new papers)
- NEP-EEC-2008-12-01 (European Economics)
- NEP-GEO-2008-12-01 (Economic Geography)
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