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How much does state aid mitigate employment losses? Local policy effects at a time of economic crisis

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  • Augusto Cerqua
  • Guido Pellegrini

Abstract

We evaluate the effectiveness of the most extensive experiment of income redistribution, that is, the European Union regional policy, at a time of economic crisis. By exploiting geographical discontinuities in fund eligibility, we analyse comprehensive data on all publicly funded Italian projects at the municipality level. We find a positive impact of localized support to firms with a sizable increase in employment and the number of plants in intensively treated areas. The result is an important policy lesson concerning the effects of place-based policies at a time of a long-lasting recession, such as that engendered by the Covid-19 crisis.

Suggested Citation

  • Augusto Cerqua & Guido Pellegrini, 2022. "How much does state aid mitigate employment losses? Local policy effects at a time of economic crisis," Regional Studies, Taylor & Francis Journals, vol. 56(10), pages 1698-1712, October.
    • Handle: RePEc:taf:regstd:v:56:y:2022:i:10:p:1698-1712
    DOI: 10.1080/00343404.2021.2003319
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