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European Funds and Firm Dynamics: Estimating Spillovers from Increased Access

Author

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  • João Pereira dos Santos

    (Nova School of Business and Economics)

  • José Tavares

    (Nova School of Business and Economics and Centre for Economic Policy Research (CEPR))

Abstract

We take advantage of a quasi-natural experiment to assess the impact of European funds on firm dynamics in regions that, while not having their status changed, saw their neighbours increased access to European funds. Causality is established in a difference-in-differences intention to treat setting, using a rich dataset that considers the universe of Portuguese mainland municipalities from 2003 to 2010, and controlling for socio-economic, political and demographic variables. Our findings suggest a causal impact of between 1 and 2 percent in private sector firms´ entry and net entry rates, while we find no impact on firm exit rates. We consider time and space placebos to assure the reliability of our estimates. Our findings suggest that EU regional funds have a greater impact in times of distress, such as the world economic crisis, as far as entry rates are concerned. The analysis of the cross-section of firm demonstrates it is domestic owned micro firms in the primary and tertiary sectors that are most impacted by regional funds.

Suggested Citation

  • João Pereira dos Santos & José Tavares, 2018. "European Funds and Firm Dynamics: Estimating Spillovers from Increased Access," GEE Papers 0099, Gabinete de Estratégia e Estudos, Ministério da Economia, revised Mar 2018.
    • Handle: RePEc:mde:wpaper:0099
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    File URL: https://www.gee.gov.pt//RePEc/WorkingPapers/GEE_PAPERS_99.pdf
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    References listed on IDEAS

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    Cited by:

    1. Tavares, José & Alpalhão, Henrique & Lopes, Marta & Pereira Dos Santos, Joao, 2020. "Public Expenditure and Private Firm Performance: Using Religious Denominations for Causal Inference," CEPR Discussion Papers 14448, C.E.P.R. Discussion Papers.
    2. Bruno Carvalho & Susana Peralta & Joao Pereira dos Santos, 2020. "What and how did people buy during the Great Lockdown? Evidence from electronic payments," Working Papers ECARES 2020-20, ULB -- Universite Libre de Bruxelles.
    3. Bruno P. Carvalho & Susana Peralta & João Pereira dos Santos, 2022. "Regional and sectorial impacts of the Covid‐19 crisis: Evidence from electronic payments," Journal of Regional Science, Wiley Blackwell, vol. 62(3), pages 757-798, June.

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    More about this item

    Keywords

    quasi-natural experiment; European funds; firm creation; municipalities;
    All these keywords.

    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • R10 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General

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