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Impact of macro†structural reforms on the productivity growth of regions: Distance to the frontier matters

Author

Listed:
  • D’Costa, Sabine
  • Garcilazo, Jose Enrique
  • Oliveira Martins, Joaquim

Abstract

Using a panel of 265 regions from 24 OECD countries from 1997 to 2007, we explore the impact of nation†wide macroeconomic and structural policies on the productivity growth of subnational regions. We find that average relationships between nation†wide policies and regional productivity growth can hide strong differentiated effects according to the distance to the frontier: relaxing employment protection legislation on temporary contracts, lowering barriers to trade and investment and increasing trade openness enhances productivity growth in lagging regions, whereas reducing barriers to entrepreneurship or higher levels of government debt has a positive effect on regions closer to the productivity frontier.

Suggested Citation

Handle: RePEc:eee:paresc:v:98:y:2019:i:1:p:133-167
DOI: 10.1111/pirs.12346
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JEL classification:

  • 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
  • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure

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