European Funds and Firm Dynamics: Estimating Spillovers from Increased Access

Jose Tavares () and João Pereira Dos Santos

No 13082, CEPR Discussion Papers from Centre for Economic Policy Research

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.

Keywords: Quasi-natural experiment; European funds; Firm creation; Municipalities (search for similar items in EconPapers)
JEL-codes: C21 R10 (search for similar items in EconPapers)
Date: 2018-07
New Economics Papers: this item is included in nep-ent, nep-eur, nep-sbm and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Related works:
Working Paper: European funds and firm dynamics: Estimating spillovers from increased access (2020)
Working Paper: European Funds and Firm Dynamics: Estimating Spillovers from Increased Access (2018)
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