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Title:Going NUTS: the effect of EU structural funds on regional performance PDF Logo
Authors:Becker, Sascha O.
Egger, Peter
von Ehrlich, Maximilian
Fenge, Robert
Issue Date:2008
Series/Report no.:CESifo working paper 2495
Abstract:The European Union (EU) provides grants to disadvantaged regions of member states to allow them to catch up with the EU average. Under the Objective 1 scheme, NUTS2 regions with a GDP per capita level below 75% of the EU average qualify for structural funds transfers from the central EU budget. This rule gives rise to a regression-discontinuity design that exploits the discrete jump in the probability of EU transfer receipt at the 75% threshold. Additional variability arises for smaller regional aggregates - so-called NUTS3 regions - which are nested in a NUTS2 mother region. Whereas some relatively rich NUTS3 regions may receive EU funds because their NUTS2 mother region qualifies, other relatively poor NUTS3 regions may not receive EU funds because their NUTS2 mother region does not qualify. We find positive growth effects of Objective 1 funds, but no employment effects. A simple cost-benefit calculation suggests that Objective 1 transfers are not only effective, but also cost-efficient.
Subjects:Structural funds
regional growth
regression discontinuity design
quasi-randomized experiment
JEL:C21
O40
H54
R11
Document Type:Working Paper
Appears in Collections:CESifo Working Papers, CESifo Group Munich

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