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The impact of place-based policies on income distribution

Author

Listed:
  • Giuseppe Albanese

    (Banca d'Italia)

  • Guglielmo Barone

    (Università di Bologna)

  • Guido DeBlasio

    (Banca d'Italia)

Abstract

This paper assesses the causal impact of a prominent place-based policy - the EU cohesion policy - on income distribution in the receiving areas by studying a severe contraction of financing, which took place in the Italian region of Molise starting from 2008. We focus on the Gini Index at the municipality level and leverage a spatial difference-in-discontinuity empirical design. We show that local income distribution becomes more equal in the municipalities exposed to the shrinkage of EU funds, relative to untreated units located on the other side of the geographical border that identifies the generosity of aid regimes. The decrease in the Gini coefficient is due to the move of top earners to the center of the distribution. The reduction in the Gini index is confirmed even if we resort to a region-level analysis, in which the causal effect of the end of the policy is assessed by means of the synthetic control method.

Suggested Citation

  • Giuseppe Albanese & Guglielmo Barone & Guido DeBlasio, 2021. "The impact of place-based policies on income distribution," Discussion Paper series in Regional Science & Economic Geography 2021-04, Gran Sasso Science Institute, Social Sciences, revised Mar 2021.
    • Handle: RePEc:ahy:wpaper:wp15
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    More about this item

    Keywords

    place-based policy; income distribution;

    JEL classification:

    • R58 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Regional Development Planning and Policy
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution

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