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on Economic Geography |
| By: | Bridget Kauma; Giordano Mion |
| Abstract: | We propose a new data resource that attempts to overcome limitations of standard firm-level datasets for the UK (like the ARD/ABS) by building on administrative data covering the population of UK firms with at least one employee. We also construct a similar dataset for France and use both datasets to: 1) Provide some highlights of the data and an overall picture of the evolution of aggregate UK and French productivity and markups: 2) Analyse the spatial distribution of productivity in both countries at a fine level of detail – 228 Travel to Work Areas (TTWAs) for the UK and 297 Zones d‘emploi (ZEs) for France – while focusing on the role of economic density. Our findings suggest that differences in firm productivity across regions are magnified in the aggregate by an increasing productivity return of density along the productivity distribution. |
| Keywords: | firm-level dataset, merging, BSD, FAME, VAT, FICUS, FARE, productivity, markups, UK, France, regional disparities, density |
| JEL: | R12 D24 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11543 |
| By: | Mau, Karsten (RS: GSBE MORSE, RS: GSBE FSD, RS: GSBE other - not theme-related research, Macro, International & Labour Economics); Xu, Mingzhi; Zheng, Yawen |
| Abstract: | We evaluate how access to international transport infrastructure promotes trade and economic development. Exploiting the gradual unfolding of transcontinental rail freight connections between China and Europe, our empirical findings indicate increasing exports from connected cities, with positive spillovers to other transport modes, neighboring cities, and indicators of economic activity. Not all products and cities are equally responsive to new rail export opportunities. We set up a multi-sector heterogeneous firms model with a rich specification of trade costs, in which firms optimize trade costs by choosing alternative transportation modes and routes. Leveraging a unique data set on trade flows between Chinese cities, we calibrate our model to discuss local welfare effects, relying on a sufficient statistic that quantifies changes in city-level trade costs. We also highlight significant spatial distributional effects of trade infrastructure development. |
| JEL: | F14 F15 R11 R41 |
| Date: | 2025–01–16 |
| URL: | https://d.repec.org/n?u=RePEc:unm:umagsb:2025001 |
| By: | Mitsch, Frieder; Hassel, Anke; Soskice, David |
| Abstract: | This paper examines Germany’s distinctive path toward the knowledge economy, emphasizing the role of regional innovation dynamics and governance, with a focus on Southern Germany’s high-innovation clusters. Unlike other advanced economies that pivoted toward high-tech services, Germany has prioritized digital advancements within its manufacturing base, creating a model driven by smart manufacturing and Industry 4.0. We argue that regional growth coalitions, formed by firms, social partners, and local governments, foster institutional configurations supporting knowledge-based and innovation-focused competition. This regionalized governance has enabled Southern Germany to capitalize on Germany’s innovation agenda, a success that other regions have struggled to replicate. By analysing multi-scalar dynamics—interactions across regional, national, and EU levels—our study expands evolutionary economic geography (EEG) and political economy literature, challenging traditional, nation-centric frameworks. Our findings highlight that cohesive regional governance can enhance national and supranational innovation strategies, underscoring the importance of regional institutions in advancing and sustaining knowledge economy innovation. |
| JEL: | N0 R14 J01 |
| Date: | 2024–12–05 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:126264 |
| By: | Muringani, Jonathan; Dahl Fitjar, Rune; Rodríguez-Pose, Andrés |
| Abstract: | This paper examines the complex relationship between political and social trust, government quality, and economic development across 208 regions in the European Union (EU). We use a pooled data generalized structural equation model (GSEM) to show that political trust serves as a fundamental driver of regional economic development in the EU. Political trust is, in turn, influenced by both social trust and government quality. Social trust and government quality have quadratic effects on political trust, showing diminishing returns, while the effect of political trust on economic development is linear. Political trust mediates the relationship between social trust and economic development entirely, while government quality retains a direct relationship with economic development. These findings underscore the fundamental role that political trust plays as a mechanism through which both formal and informal institutions shape regional development. |
| Keywords: | political trust; social trust; quality of government; regional economic development; EU |
| JEL: | R11 H11 D73 |
| Date: | 2024–12 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:125630 |
| By: | Gabriel M. Ahlfeldt; Fabian Bald; Duncan H.W. Roth; Tobias Seidel; Gabriel Ahlfeldt; Duncan Roth |
| Abstract: | Using a quantitative spatial model as a data-generating process, we explore how spatial frictions affect the measurement of quality of life. We find that under a canonical parameterization, mobility frictions—generated by idiosyncratic tastes and local ties—dominate trade frictions—generated by trade costs and non-tradable services—as a source of measurement error in the Rosen-Roback framework. This non-classical measurement error leads to a downward bias in es-timates of the urban quality-of-life premium. Our application to Germany reveals that accounting for spatial frictions results in larger quality-of-life differences, different quality-of-life rankings, and an urban quality-of-life premium that exceeds the urban wage premium. |
| Keywords: | housing, spatial frictions, rents, prices, productivity, quality of life, spatial equilibrium, wages |
| JEL: | J20 J30 R20 R30 R50 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11560 |
| By: | Berliant, Marcus; Tabuchi, Takatoshi |
| Abstract: | To investigate questions related to migration and trade, a model of regional or international development is created by altering Melitz and Ottaviano (2008) to include a labor market. The model is then applied to analyze poverty traps and the home market effect. We find that in the spatial economics context of migration but no trade, poverty can persist unless population in one region of many is pushed past a threshold. Then growth commences. In the context of trade but no migration, the home market effect holds for a range of parameters, similar to previous literature. However, unlike previous literature, we find that if populations in the countries are large, the home market effect can be reversed. |
| Keywords: | Monopolistic competition; Poverty trap; Home market effect; Labor market clearing |
| JEL: | F12 R11 |
| Date: | 2024–12–02 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:122854 |
| By: | Herrera Gómez Marcos; Elosegui Pedro; Michelena Gabriel |
| Abstract: | Multi-regional input-output (MRIO) matrices are an important tool for regional economic analysis, but compiling the data for them remains challenging, especially in developing countries like Argentina. There is no consistent, up-to-date, official national I-O table available for Argentina, and data at the provincial level is limited and fragmented across different sources. This paper develops a premier (limited information) multi-regional input-output matrix for Argentina 2019 making a dual contribution: (i) constructing the first MRIO table for Argentina using official and customized sources, and (ii) evaluating I-O multipliers, providing insights for future applications. The MRIO table includes 5 regions aggregating the 24 Argentinean provinces and 20 economic sectors. While only basic multipliers are presented, the table provides a foundation for more in-depth input-output modeling and analysis of production, consumption, and trade linkages between regions and sectors in Argentina. We found a high concentration in the provinces of the Pampeana region in gross output, value added and regional internal inputs, although less in external inputs, confirming the asymmetric structure of the country. In addition, the analysis of multipliers allows us to detect some relevant links in the peripheral regions reflecting the interaction of spatial location and sector specialization in a federal and heterogeneous open developing economy. |
| JEL: | C67 D57 |
| Date: | 2024–11 |
| URL: | https://d.repec.org/n?u=RePEc:aep:anales:4739 |
| By: | Apablaza, Mauricio; Sehnbruch, Kirsten; González, Pablo; Méndez, Rocío |
| Abstract: | This paper proposes a multidimensional synthetic index for measuring the quality of employment using the Alkire–Foster method. The results generated by this index highlight important differences between Chile's regions, but also a process of convergence, which has been mostly driven by regulatory changes and public policy rather than economic growth. The paper shows how much a synthetic index can contribute to regional analysis and how it can inform policymakers by focusing attention on the most vulnerable workers in regional labour markets. |
| Keywords: | labour markets; Latin America; quality of employment; regional convergence; regional studies |
| JEL: | J40 J48 N56 R23 |
| Date: | 2023–12–31 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:115453 |
| By: | A. Kerem Coşar; Sophie Osotimehin; Latchezar Popov |
| Abstract: | We quantify the aggregate, regional and sectoral impacts of transportation productivity growth on the US economy over the period 1947-2017. Using a multi-region, multi-sector model that explicitly captures produced transportation services as a key input to interregional trade, we find that the calibrated change in transportation productivity had a sizable impact on aggregate welfare, magnified by a factor of 2.3 compared to its sectoral share in GDP. The amplification mechanism results from the complementarity between transport services and tradable goods, interacting with sectoral and spatial linkages. The geographical implications are highly uneven, with the West and Southwest benefiting the most from market access improvements while the Northeast experiences a decline. Sectoral impacts are largest in transportation-intensive activities like agriculture, mining and heavy manufacturing. Our results demonstrate the outsized and heterogeneous impact of the transportation sector in shaping US economic activity through specialization and spatial transformation. |
| JEL: | E23 O18 R13 |
| Date: | 2024–12 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33248 |
| By: | Giannantoni, Costanza; Rodríguez-Pose, Andrés |
| Abstract: | Declining fertility and the persistent underrepresentation of women in the labour market are key concerns of our time. The fact that they overlap is not fortuitous. Traditionally, women everywhere have faced a conflict in balancing their career ambitions with family responsibilities. Yet, the pressures arising from this conflict vary enormously from one place to another. Existing research has tended to overlook the geographical features of this dilemma, which could result in an inadequate understanding of the issue and lead to ineffective policy responses. This paper examines how variations in the quality of regional institutions affect women’s capacity to reconcile career and motherhood and, consequently, gender equality within Europe. Using panel data from 216 regions across 18 European countries, we uncover a positive effect of regional institutional quality on fertility rates, taking into account variations in female employment. Moreover, we show that European regions with better government quality provide a more reliable environment for managing the career/motherhood dilemma often faced by women. In contrast, women living in regions with weaker government institutions are more constrained in both their career and childbearing options. |
| Keywords: | fertility; gender equality; institutional equality; European regions |
| JEL: | J11 J13 R11 |
| Date: | 2024–11–09 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:125631 |
| By: | Aizawa, Hiroki; Saka, Takuhiro |
| Abstract: | Remote work can affect population distribution in an urban system (i.e., a chain of cities). The current paper explores the effects of remote work on population distribution in an urban system, welfare, and utilities of workers. To examine these effects, we explore the equilibria of a New Economic Geography model that expresses remote workers. We elucidate the bifurcation mechanism of the full agglomeration in a narrow corridor with NEG models with two industries and remote work in order to investigate the effect of remote work on equilibrium. We demonstrate that the introduction of remote work can decrease the utilities of workers. We show that remote workers with myopic behavior themselves decrease their own utilities. With myopic behavior, it is not necessarily ensured that remote workers can obtain higher utilities compared to those with population distribution before the introduction of remote work. |
| Keywords: | Agglomeration; Bifurcation; Economic geography; Remote work; Welfare |
| JEL: | R12 R14 |
| Date: | 2024–12–08 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:122913 |
| By: | Casas, Pablo; Christou, Tryfonas; García Rodríguez, Abián; Heidelk, Tillmann; Lazarou, Nicholas Joseph; Monfort, Philippe; Salotti, Simone |
| Abstract: | We analyse the macroeconomic impact of the European cohesion policy investments deployed during the 2014-2020 programming period on the basis of simulations carried out with the spatial dynamic general equilibrium model called RHOMOLO. We use the latest data on actual expenditures including the €50 billion falling under the REACT-EU programme extending the response to the COVID-19 crisis. We quantify the direct and indirect effects of the policy in the NUTS 2 regions of the European Union within a 20-year time frame. The results suggest that the impact of the policy is sizeable, especially in the less developed regions. Accordingly, regional disparities are shown to decrease due to the policy intervention. The investments have a positive impact on the European GDP, which is almost 0.6% higher in 2023 compared to a scenario without cohesion policy. |
| Keywords: | Cohesion policy, REACT-EU, regional growth, regional development, general equilibrium modelling. |
| JEL: | C68 R13 |
| Date: | 2024–12 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:122873 |
| By: | Roy Cerqueti (Department of Social and Economic Sciences, Sapienza University of Rome, Italy & GRANEM, University of Angers, France); Paolo Maranzano (Department Economics, Management and Statistics); Raffaele Mattera (Department of Social and Economic Sciences, Sapienza University of Rome, Italy) |
| Abstract: | In this paper, we present an extension of the spatially-clustered linear regression models, namely, the spatially-clustered spatial autoregression (SCSAR) model, to deal with spatial heterogeneity issues in clustering procedures. In particular, we extend classical spatial econometrics models, such as the spatial autoregressive model, the spatial error model, and the spatially-lagged model, by allowing the regression coefficients to be spatially varying according to a cluster-wise structure. Cluster memberships and regression coefficients are jointly estimated through a penalized maximum likelihood algorithm which encourages neighboring units to belong to the same spatial cluster with shared regression coefficients. Motivated by the increase of observed values of the Gini index for the agricultural production in Europe between 2010 and 2020, the proposed methodology is employed to assess the presence of local spatial spillovers on the market concentration index for the European regions in the last decade. Empirical findings support the hypothesis of fragmentation of the European agricultural market, as the regions can be well represented by a clustering structure partitioning the continent into three-groups, roughly approximated by a division among Western, North Central and Southeastern regions. Also, we detect heterogeneous local effects induced by the selected explanatory variables on the regional market concentration. In particular, we find that variables associated with social, territorial and economic relevance of the agricultural sector seem to act differently throughout the spatial dimension, across the clusters and with respect to the pooled model, and temporal dimension. |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2407.15874 |
| By: | Matthew Turner; David N. Weil |
| Abstract: | Cities are often described as engines of economic growth. We assess this statement quantitatively. We focus on two mechanisms: a static agglomeration effect that makes production in bigger cities more efficient, and a dynamic effect whereby urban scale impacts the productivity of invention, which in turn determines the speed of technological progress for the country as a whole. Using estimates of these effects from the literature and MSA-level patent and population data since 1900, we ask how much lower US output would be in 2010 if city size had been limited to one million or one hundred thousand starting in 1900. These effects are small. If city sizes had been limited to one million people since 1900, output in 2010 would have been only 8% lower than its observed value. |
| JEL: | O40 R10 |
| Date: | 2025–01 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33334 |
| By: | Bennett, Robert J.; Hannah, Leslie |
| Abstract: | The article assesses the relative weight of different sources of workforce size, using both relative marginal effects and proportion of variance explained for the 545 largest British firms in 1881. Despite data uncertainties, integration is shown as the largest contributor to scale. Integration with mining had even larger effects, raising employment by 35%. Internal capital intensity reduced labour for the majority of firms by about 4 workers per £10, 000 capital, but much more for tramways. Place-based externalities had greatest marginal effects for agglomerations (measured by population size). Generally, sectoral localisation was insignificant, but for small localities with more than one firm in a single sector, firm size increased 26–30% compared to diversified localities. Local monopsony (measured by workforce proportion of local population) explained a large proportion of variance because it occurred in a large number of small places. Of other variables explored, only legal form is of major importance. |
| Keywords: | agglomeration; clusters; economies of scale; externalities; monopoly |
| JEL: | J21 |
| Date: | 2024–11–26 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:126297 |
| By: | Leogrande, Angelo; Drago, Carlo; Mallardi, Giulio; Costantiello, Alberto; Magaletti, Nicola |
| Abstract: | This article focuses on the propensity to patent across Italian regions, considering data from ISTAT-BES between 2004 and 2019 to contribute to analyzing regional gaps and determinants of innovative performances. Results show how the North-South gap in innovative performance has persisted over time, confirming the relevance of research intensity, digital infrastructure, and cultural employment on patenting activity. These relations have been analyzed using the panel data econometric model. It allows singling out crucial positive drivers like R&D investment or strongly negative factors, such as limited mobility of graduates. More precisely, given the novelty of approaches applied in the used model, the following contributions are represented: first, the fine grain of regional differentiation, from which the sub-national innovation system will be observed. It also puts forward a set of actionable policy recommendations that would contribute to more substantial inclusive innovation, particularly emphasizing less-performing regions. By focusing on such dynamics, this study will indirectly address how regional characteristics and policies shape innovation and technological competitiveness in Italy. Therefore, it contributes to the debate on regional systems of innovation and their possible role in economic development in Europe since the economic, institutional, and technological conditions are differentiated between various areas in Italy. |
| Keywords: | Innovation, Innovation and Invention, Management of Technological Innovation and R&D, Technological Change, Intellectual Property and Intellectual Capital |
| JEL: | O30 O31 O32 O33 O34 O35 O38 |
| Date: | 2024–12–23 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:123081 |
| By: | Andrea Xamo (Department of Economics (University of Verona)); Roberto Ricciuti (Department of Economics (University of Verona)) |
| Abstract: | Italy, a latecomer country to industrialization, faced the hurdles of lacking coal in the age of steam. When the technology for long-distance electricity transmission became available, it invested heavily in hydropower. By 1911, 42.7% of Italy’s installed industrial power came from hydroelectricity. Using methodologies rooted in New Economic Geography (NEG) and factor endowment theories, we analyze the location of industrial activity across Italian provinces during the census years 1901 and 1911. We evaluate the influence of electric power as a distinct factor alongside traditional determinants such as market potential, human capital, and energy intensity. Our approach incorporates new data on GDP, literacy, and energy stocks, enabling a fine-grained analysis at the NUTS-3 level. Dependent variables include provincial shares of industrial employment and GDP, regressed on interactions between industrial and provincial characteristics. Baseline OLS findings highlight the role of electricity in industrial location, with its influence growing markedly between 1901 and 1911. Alternative specifications and instrumental variable techniques confirm these results, underscoring electricity’s transformative role in reducing Italy’s dependence on water-powered manufacturing. These findings align with broader interpretations of electrification’s role in enabling industrial diversification and regional economic development during the Second Industrial Revolution. |
| Keywords: | Electrification, industry location, Italian manufacturing, market potential, factor endowments, Liberal Italy. |
| JEL: | N73 N93 O18 R30 |
| Date: | 2025–01 |
| URL: | https://d.repec.org/n?u=RePEc:ver:wpaper:01/2025 |
| By: | Tranos, Emmanouil; Kitsos, Tasos; Wolf, Levi John (University of Bristol) |
| Abstract: | The discussion about the productivity gains from digital technologies is almost as old as digital technologies themselves. From early futuristic approaches to the various forms of the productivity paradox, there are still open questions regarding if and how the internet can lead to positive economic effects as well as their spatial heterogeneity. The usual caveat to unpack this relationship is data about internet usage that is detailed enough to be linked both to economic outputs and places. We develop a multilevel modelling framework and combine firm-level microdata with novel internet speed microdata illustrating how connectivity has been experienced by end-users. Although it is not possible to directly observe the online activities of individuals, these data allow us to approximate business usage. Additionally, we can distinguish between upload and download speeds, which is important as these channels can support different internet functions (e.g. video streaming vs. synchronous communications). We then observe firms, their productivity, and other firm characteristics and estimate the firm productivity effects of broadband speeds after accounting for spatial effects and platial characteristics, which are also associated with the underpinning digital divides. We find that increases in a place's internet speeds can lead to higher firm productivity whilst the opposite holds for instability of internet speeds. These results vary by sector and firm characteristics. Our results have significant policy implications, highlighting the economic impact of high-speed internet infrastructure planning decisions and presenting policymakers with a clear efficiency vs. equity trade-off. |
| Date: | 2024–12–02 |
| URL: | https://d.repec.org/n?u=RePEc:osf:osfxxx:va375 |
| By: | Antonin Bergeaud (HEC Paris, CEP-LSE, CEPR); Max Deter (University of Potsdam); Maria Greve (Utrecht University); Michael Wyrwich (Groningen University) |
| Abstract: | We investigate the causal relationship between inventor migration and regional innovation in the context of the large-scale migration shock from East to West Germany between World War II and the construction of the Berlin Wall in 1961. Leveraging a newly constructed, century-spanning dataset on German patents and inventors, along with an innovative identification strategy based on surname proximity, we trace the trajectories of East German inventors and quantify their impact on innovation in West Germany. Our findings demonstrate a significant and persistent boost to patenting activities in regions with higher inflows of East German inventors, predominantly driven by advancements in chemistry and physics. We further validate the robustness of our identification strategy against alternative plausible mechanisms. We show in particular that the effect is stronger than the one caused by the migration of other high skilled workers and scientists. |
| Keywords: | patents, migration, Germany, Iron Curtain, innovation |
| JEL: | H10 N44 P20 D31 |
| Date: | 2025–01 |
| URL: | https://d.repec.org/n?u=RePEc:pot:cepadp:84 |
| By: | Batabyal, Amitrajeet; Kourtit, Karima; Nijkamp, Peter |
| Abstract: | This paper introduces a model of political competition under distinct institutional regimes to trace the economic performance of what we call “techno-creative places.” Specifically, we analyze how political competition in high-tech places that are creative in the sense of Richard Florida affects fiscal (tax) policy and consequent economic outcomes. There are three stylized groups of actors in our analysis: laborers or workers, techno-creative class members or entrepreneurs, and the elites who make the political decisions. We study two broad institutional-economic scenarios. In the first (second) scenario, the likelihood of political power shifting permanently from the elites to entrepreneurs is an increasing (decreasing) function of the net income of a representative techno-creative entrepreneur. Our study addresses the institutional implications of both scenarios and then comments on the implications of these two scenarios for the welfare of the elites and the techno-creative entrepreneurs. |
| Keywords: | Techno-Creative Class, Elite, Entrepreneur, Political Competition, Tax Policy |
| JEL: | H21 R11 |
| Date: | 2024–07–23 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:122778 |
| By: | Oshan, Taylor M.; Kang, Wei (University of California Riverside) |
| Abstract: | Multiscale Geographically Weighted Regression (MGWR) is a relatively recent innovation and addition to the family of spatial regression models capable of investigating process heterogeneity. Compared with its predecessor, Geographically Weighted Regression (GWR), MGWR relaxes the assumption of a uniform spatial scale across all modeled processes. That is, MGWR allows for the possibility that some processes vary locally while others vary regionally or not at all. As a result, it provides more accurate parameter estimates. However, this relationship between scale and the correlation within and across geographically weighted regressors (i.e., spatial autocorrelation and multicollinearity) has yet to be formally investigated. This paper sheds light on this issue via two sets of controlled simulation experiments. The results suggest that both types of correlations have a negligible effect on MGWR performance until they become very strong, and their impacts are cumulative. Overall, MGWR is better at alleviating any potential local multicollinearity issues than GWR due to the varying scales estimated for different parameter surfaces. Two additional insights were obtained regarding scale. First, high levels of spatial autocorrelation may potentially contribute towards the underestimation of scale for certain processes, typically those with the lowest level of spatial heterogeneity (including the intercept), potentially falsely identifying local effects. Second, high levels of collinearity may contribute to the misidentification of anticipated scales. In some cases, when the true process is spatially varying, collinearity may lead the bandwidth to be overestimated, which can help mitigate issues associated with high collinearity but may also lead to difficulty identifying local effects. In other cases, when the true process is constant, collinearity may lead the bandwidth to be underestimated but is not problematic for accurately estimating coefficients unless collinearity becomes high. As a result, it is suggested that the optimal bandwidths estimated from MGWR be interpreted with some caution for the additional factors that may influence them. These results have important implications for empirical applications of MGWR. |
| Date: | 2024–11–25 |
| URL: | https://d.repec.org/n?u=RePEc:osf:osfxxx:cujby |
| By: | Baraldi, Anna Laura; Cantabene, Claudia; De Iudicibus, Alessandro; Fosco, Giovanni |
| Abstract: | The allocation of funds to finance cohesion policies has been a significant European and national level activity. We focus on the 2007-2013 and 2014-2020 programming periods within a 23-year (2000 to 2022) time frame to assess whether and how cohesion funds have affected per-capita income growth rates in the municipalities in the Objective 1 Italian regions of Calabria, Campania, Apulia, and Sicily. We use static and dynamic difference-in-differences methodologies. Municipal level examination allows us to filter out the distorting effects generated by characteristics typical of those countries whose regions have benefited from the allocation of structural funding. The literature shows that structural funding causes contrasting effects on various economic variables. We found significant increases in municipal per-capita income growth rates in the treated compared to the control group of municipalities, with increased effects starting from the 10th year after the first payment. We interpret our results in terms of income inequality; we show that funding causes a rise in both the Gini and Atkinson inequality indexes. This suggests that while EU cohesion funds have been effective for promoting income growth, they have not improved equity. |
| Keywords: | Cohesion Policies, Diff-in-Diff, Objective 1 Regions, Income growth, Inequalities |
| JEL: | C21 C22 R11 R15 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:123048 |
| By: | Robert Minton; Casey B. Mulligan |
| Abstract: | Markets, likened to an invisible hand, often appear to contradict econometric assumptions that rule out spillovers of one person’s treatment on another’s outcomes. This paper provides a simple statistical framework highlighting that controls are indirectly affected by the treatment through the market. Further, the effect of the treatment on the treated reveals only part of the consequence for the treated of treating the entire market. When combined with economic theory, our framework leads to a new application of Marshall’s Laws of Derived Demand that relates econometric estimates of treatment effects in the marketplace to the substitution and scale effects of demand theory. We show how treatment-effect estimators can diverge – both in magnitude and direction – from the causal effects of treatment on the treated or counterfactual policies treating all market participants. The framework shows how the consequences of targeted treatments reveal the effects of marketwide treatments, and the role of market frictions in that inference. Examples from labor, public finance, economic geography, development, and the macro literature on the “missing intercept” are provided. |
| JEL: | C21 D41 L11 |
| Date: | 2024–12 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33228 |