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Direct and indirect effects of regional economic stimuli

Author

Listed:
  • Matěj Bělín

    (Social Policy Institute, Ministry of Labour, Social Affairs and Family of the Slovak Republic)

  • Ondrej Buchel

    (Social Policy Institute, Ministry of Labour, Social Affairs and Family of the Slovak Republic
    Institute for Sociology, Slovak Academy of Sciences)

Abstract

This paper estimates the impact of investment incentives in Slovakia on the unemployment rates in districts to which these incentives were targeted as well as potential spatial spillover effects. The results show that incentives directed to the least developed districts (LDDs) of the country are associated with a statistically significant reduction in unemployment rate growth in the targeted districts by about 0.1 percentage point per month over the course of three years following the intervention. By contrast, we estimated a precise zero effect of investment incentives targeted to non-LDDs. These findings are consistent with the standard economic argument of diminishing marginal returns. Estimates of the spillover effects are also centred around zero.

Suggested Citation

  • Matěj Bělín & Ondrej Buchel, 2024. "Direct and indirect effects of regional economic stimuli," Empirical Economics, Springer, vol. 66(4), pages 1661-1681, April.
    • Handle: RePEc:spr:empeco:v:66:y:2024:i:4:d:10.1007_s00181-023-02506-7
    DOI: 10.1007/s00181-023-02506-7
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    More about this item

    Keywords

    Regional development; Regional inequality; Spatial spillovers; Differences in differences; Transitional economies;
    All these keywords.

    JEL classification:

    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • O20 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - General
    • R58 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Regional Development Planning and Policy

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