Measuring the Impact of the European Regional Policy on Economic Growth: a Regression Discontinuity Design Approach

Busillo, Teo Muccigrosso (), Guido Pellegrini, Ornella Tarola and Terribile
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Busillo: Ministero dello Sviluppo Economico, Dipartimento per lo Sviluppo e la Coesione Economica
Teo Muccigrosso: Ministero dello Sviluppo Economico, Dipartimento per lo Sviluppo e la Coesione Economica
Terribile: Ministero dello Sviluppo Economico, Dipartimento per lo Sviluppo e la Coesione Economica

No 6/10, Working Papers from Sapienza University of Rome, DISS

Abstract: Given the increasing share of the EU budget devoted to Regional Policy, several studies have tried to identify the policy’s contribution to regional economic growth. However, so far no consensus has been reached on the effectiveness of Cohesion policy, due to both limitations in data availability and comparability at regional level, and the difficulties in isolating the effects of the policy from the confounding effect of other factors. The purpose of this paper is to assess the effectiveness of UE Regional Policy, using a counterfactual method - the regression discontinuity design (henceforth RDD). We exploit the allocation rule of regional UE transfer: regions with a per capita GDP level below 75% of the EU average receive a huge amount of UE structural funds transfers. The sharp RDD is based to the jump in the probability of EU transfer receipt at the 75% cut-off point. Comparing the economic scenario arising under policy interventions with a ‘counterfactual’ situation - what would have happened if the policies were not implemented - we identify the economic effect of European regional interventions and show that they are positive and statistically significant. The most part of the larger growth of Obj. 1 regions in the period 1995-2006 can be attributed to Regional Policy.

Keywords: cohesion policy; regional growth; evaluation policy impact; regression discontinuity design. (search for similar items in EconPapers)
JEL-codes: C14 O18 O47 (search for similar items in EconPapers)
Date: 2010-01
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Citations: View citations in EconPapers (10)

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