On the optimal design of place-based policies: A structural evaluation of EU regional transfers

Yashar Blouri and Maximilian von Ehrlich

Journal of International Economics, 2020, vol. 125, issue C

Abstract: We quantify general equilibrium effects of place-based policies in a multi-region framework with population mobility, trade and agglomeration economies. Using detailed data on EU transfers, we estimate the local effects of different transfer types on productivity, income and transportation costs. Integrating these estimates into the model, we derive the spatial distribution of economic activity and corresponding welfare that would have materialized without transfers. We show that EU transfers have improved welfare. Substantial further welfare gains could be reached by reallocating funds across regions without increasing the budget. We identify the welfare-optimal spatial distribution for each transfer type and show that wage subsidies should rather be directed to few poor and peripheral regions while investments in transport infrastructure are most efficient in highly productive and/or central regions.

Keywords: Economic geography; Place-based policies; Structural estimation; Subsidies; Public investments; European structural funds (search for similar items in EconPapers)
JEL-codes: F10 F20 H20 R10 R50 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (13)

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Related works:
Working Paper: On the Optimal Design of Place-Based Policies: A Structural Evaluation of EU Regional Transfers (2017)
Working Paper: On the optimal design of place-based policies: A structural evaluation of EU regional transfers (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:inecon:v:125:y:2020:i:c:s0022199618302794

DOI: 10.1016/j.jinteco.2020.103319

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