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The (displacement) effects of spatially targeted enterprise initiatives: evidence from UK LEGI

Elias Einiö and Henry Overman ()

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: We investigate the impacts of a significant area-based intervention (LEGI) that aimed to increase employment and entrepreneurial activity in 30 disadvantaged areas across England. We examine the spatial pattern of effects at a fine spatial scale using panel data for small geographic units and a regression discontinuity design that exploits the programme eligibility rule. The results indicate considerable local displacement effects. Employment increases in treated areas close to the treatment area boundary at the cost of significant employment losses in untreated localities just across the boundary. These differences vanish quickly when moving away from the boundary and do not persist after the programme is abolished. These findings support the view that area-based interventions may have considerable negative displacement effects on untreated parts of the economy. This displacement can substantially reduce (or in this case eliminate) any net benefits.

Keywords: place-based policy; programme evaluation; displacement; employment; industrial policy (search for similar items in EconPapers)
JEL-codes: H25 J20 O40 R11 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ent, nep-eur, nep-pr~ and nep-ure
Date: 2016-02
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http://eprints.lse.ac.uk/66493/ Open access version. (application/pdf)

Related works:
Working Paper: The (Displacement) Effects of Spatially Targeted Enterprise Initiatives: Evidence from UK LEGI (2016) Downloads
Working Paper: The (Displacement) Effects of Spatially Targeted Enterprise Initiatives: Evidence from UK LEGI (2016) Downloads
Working Paper: The (Displacement) Effects of Spatially Targeted Enterprise Initiatives: Evidence from UK LEGI (2016) Downloads
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