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On the effectiveness of EU structural funds during the Great Recession: Estimates from a heterogeneous local average treatment effects framework

Julia Bachtrögler

Department of Economics Working Papers from Vienna University of Economics and Business, Department of Economics

Abstract: This study investigates the heterogeneity of European NUTS-2 regions with regard to their ability to take advantage of European Union (EU) structural funds aimed at convergence. It considers a concept of absorptive capacity based on regional policy design, and additionally accounts for the programming period 2007-2013 in the empirical analysis. A fuzzy regression discontinuity design allowing for heterogeneous treatment effects is applied to evaluate convergence funds in 250 NUTS-2 regions from 2000 (and 1989) to 2013. The main results suggest a positive conditional impact of funds payments on regional GDP per capita growth. However, based on a time-varying treatment effects model, we are able to identify a deterioration in the effectiveness of convergence funds during the programming period 2007-2013. Furthermore, the analysis reveals an inverted U-shaped relationship between the share of committed funds paid out and GDP per capita growth. The latter finding indicates that the marginal benefits from EU convergence funds might be decreasing.

Keywords: Structural Funds; Heterogeneous Treatment Effects; Regional Heterogeneity; Absorptive Capacity; Cohesion; European Union (search for similar items in EconPapers)
JEL-codes: C21 F35 H77 R11 R58 (search for similar items in EconPapers)
Date: 2016-08
New Economics Papers: this item is included in nep-eff, nep-eur and nep-geo
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