Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/325022 
Year of Publication: 
2025
Series/Report no.: 
CESifo Working Paper No. 12031
Publisher: 
CESifo GmbH, Munich
Abstract: 
We study the effects of place-based policies on aggregate productivity using administrative data on projects co-financed by the EU in Italy linked to balance sheet data. We exploit quasi-experimental variation in funding for a large place-based policy stemming from measurement error in regional GDP estimates. Results show that the policy likely decreases productivity. Decompositions reveal that aggregate declines are driven by reallocation of labor to low-productivity firms. Mechanism analysis using firm-level event studies reveals that negative reallocation effects are caused by high-productivity firms taking up the funds and subsequently becoming more liquidity constrained, leading to slowdowns in employment growth.
Subjects: 
place-based policy
productivity
EU cohesion policy
JEL: 
R11
R58
J23
Document Type: 
Working Paper
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