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Absorptive Capacity and the Growth Effects of Regional Transfers: A Regression Discontinuity Design with Heterogeneous Treatment Effects

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  • Becker, Sascha O.
  • Egger, Peter
  • von Ehrlich, Maximilian

Abstract

Transfers to individuals, firms, and regions are often regulated by threshold rules, giving rise to a regression discontinuity design. An example are transfers provided by the European Commission to regions of EU member states below a certain income level. Researchers have focused on estimation of the average treatment effect of this program, assuming that it does not vary in a systematic way across units. We suggest a regression discontinuity design which allows for parametric or nonparametric identification of heterogeneous average treatment effects that systematically vary with observable characteristics in order to shed light on the role of absorptive capacity in determining the impact of regional transfers on economic growth across regions in the European Union. The results suggest that only about 47% of the regions, namely those with a sufficiently high endowment with human capital and a high quality of government, are able to turn transfers under the Union's Objective 1 Structural Funds programme into faster growth. Those regions are the ones which are responsible for a positive average effect of the programme.

Suggested Citation

  • Becker, Sascha O. & Egger, Peter & von Ehrlich, Maximilian, 2011. "Absorptive Capacity and the Growth Effects of Regional Transfers: A Regression Discontinuity Design with Heterogeneous Treatment Effects," CEPR Discussion Papers 8474, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:8474
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    References listed on IDEAS

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    Cited by:

    1. Marco Percoco, 2016. "Strategic Planning and Institutional Collective Action in Italian Cities," Public Management Review, Taylor & Francis Journals, vol. 18(1), pages 139-158, January.
    2. Salima BOUAYAD AGHA & Nadine TURPIN & Lionel VEDRINE, 2013. "Au-Delà De La Moyenne : Les Effets Par Quantile De La Politique De Cohésion De L’Union Européenne," Region et Developpement, Region et Developpement, LEAD, Universite du Sud - Toulon Var, vol. 38, pages 27-48.
    3. repec:bla:jcmkts:v:55:y:2017:i:3:p:569-592 is not listed on IDEAS
    4. Mustra Vinko & Malesevic Perovic Lena & Golem Silvia, 2014. "Social attitudes and regional inequalities," Экономика региона, CyberLeninka;Федеральное государственное бюджетное учреждение науки «Институт экономики Уральского отделения Российской академии наук», issue 1, pages 66-73.
    5. Accetturo, Antonio & de Blasio, Guido & Ricci, Lorenzo, 2014. "A tale of an unwanted outcome: Transfers and local endowments of trust and cooperation," Journal of Economic Behavior & Organization, Elsevier, vol. 102(C), pages 74-89.

    More about this item

    Keywords

    Absorptive capacity; Heterogeneous local average treatment effects; Regional transfers; Regression discontinuity design;

    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
    • 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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