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On the optimal design of place-based policies: A structural evaluation of EU regional transfers

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  • Blouri, Yashar
  • Ehrlich, Maximilian V.

Abstract

We quantify general equilibrium effects of place-based policies in a multi-region framework with population mobility, trade and agglomeration economies. Using detailed data on EU transfers, we estimate the local effects of different transfer types on productivity, income and transportation costs. Integrating these estimates into the model, we derive the spatial distribution of economic activity and corresponding welfare that would have materialized without transfers. We show that EU transfers have improved welfare. Substantial further welfare gains could be reached by reallocating funds across regions without increasing the budget. We identify the welfare-optimal spatial distribution for each transfer type and show that wage subsidies should rather be directed to few poor and peripheral regions while investments in transport infrastructure are most efficient in highly productive and/or central regions.

Suggested Citation

  • Blouri, Yashar & Ehrlich, Maximilian V., 2020. "On the optimal design of place-based policies: A structural evaluation of EU regional transfers," Journal of International Economics, Elsevier, vol. 125(C).
  • Handle: RePEc:eee:inecon:v:125:y:2020:i:c:s0022199618302794
    DOI: 10.1016/j.jinteco.2020.103319
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    2. Xiameng Pan & Chang Sun, 2023. "Internal Migration, Remittances and Economic Development," CESifo Working Paper Series 10623, CESifo.
    3. 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).
    4. Liliana CHIHAIA SAVA & Diakoniuk Oleksandr, 2021. "Comparative Analysis On The Implementation Of European Projects At The Level Of The European Union And Romania In The Period 2007-2013 And 2014-2020," Internal Auditing and Risk Management, Athenaeum University of Bucharest, vol. 62(2), pages 135-145, June.
    5. 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).
    6. 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.

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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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    Access and download statistics

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