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The (Displacement) Effects of Spatially Targeted Enterprise Initiatives: Evidence from UK LEGI

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  • Einiö, Elias
  • Overman, Henry G

Abstract

We investigate the impacts of a significant area-based intervention (LEGI) that aimed to increase employment and entrepreneurial activity in 30 disadvantaged areas across England. We examine the spatial pattern of effects at a fine spatial scale using panel data for small geographic units and a regression discontinuity design that exploits the programme eligibility rule. The results indicate considerable local displacement effects. Employment increases in treated areas close to the treatment area boundary at the cost of significant employment losses in untreated localities just across the boundary. These differences vanish quickly when moving away from the boundary and do not persist after the programme is abolished. These findings support the view that area-based interventions may have considerable negative displacement effects on untreated parts of the economy. This displacement can substantially reduce (or in this case eliminate) any net benefits.

Suggested Citation

  • Einiö, Elias & Overman, Henry G, 2016. "The (Displacement) Effects of Spatially Targeted Enterprise Initiatives: Evidence from UK LEGI," CEPR Discussion Papers 11112, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:11112
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    Cited by:

    1. Cerqua, Augusto & Pellegrini, Guido, 2018. "Local multipliers at work," MPRA Paper 85326, University Library of Munich, Germany.
    2. Augusto Cerqua & Guido Pellegrini, 2017. "Industrial policy evaluation in the presence of spillovers," Small Business Economics, Springer, vol. 49(3), pages 671-686, October.
    3. Augusto Cerqua & Guido Pellegrini, 2020. "Labor mobility effects of a firm-level shock," Working Papers 1/20, Sapienza University of Rome, DISS.
    4. Yashar Blouri & Maximilian von Ehrlich, 2017. "On the Optimal Design of Place-Based Policies: A Structural Evaluation of EU Regional Transfers," CESifo Working Paper Series 6742, CESifo Group Munich.
    5. Sandra Bernick & Richard Davies & Anna Valero, 2017. "Industry in Britain - An Atlas," CEP Special Papers 34, Centre for Economic Performance, LSE.
    6. Faggio, Giulia, 2019. "Relocation of public sector workers: Evaluating a place-based policy," Journal of Urban Economics, Elsevier, vol. 111(C), pages 53-75.
    7. Giulia Faggio & Teresa Schlüter & Philipp vom Berge, 2018. "Interaction of Public and Private Employment: Evidence from a German Government Move," SERC Discussion Papers 0229, Spatial Economics Research Centre, LSE.
    8. Marco Di Cataldo, 2016. "Gaining and losing EU Objective 1 funds: Regional development in Britain and the prospect of Brexit," LEQS – LSE 'Europe in Question' Discussion Paper Series 120, European Institute, LSE.
    9. Cerqua, Augusto & Pellegrini, Guido, 2018. "Local policy effects at a time of economic crisis," MPRA Paper 85621, University Library of Munich, Germany.
    10. Falck, Oliver & Koenen, Johannes & Lohse, Tobias, 2019. "Evaluating a place-based innovation policy: Evidence from the innovative Regional Growth Cores Program in East Germany," Regional Science and Urban Economics, Elsevier, vol. 79(C).

    More about this item

    Keywords

    displacement; employment; place-based policy; programme evaluation;

    JEL classification:

    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • J20 - Labor and Demographic Economics - - Demand and Supply of Labor - - - General
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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