How much does state aid mitigate employment losses? Local policy effects at a time of economic crisis. Issue 10 (3rd October 2022)

• Record Type: Journal Article
• Authors: Cerqua, Augusto; Pellegrini, Guido
• Is Part Of: Regional studies. Volume 56:Issue 10(2022)
• Page Start: 1698
• Page End: 1712
• Publication Date: 2022-10-03
• Subjects: European Union regional policy -- spatial regression discontinuity design -- recession -- municipalities; C21 -- H25 -- R11; Regional planning -- Periodicals; Regional planning -- Great Britain -- Periodicals; 307.14
• DOI: 10.1080/00343404.2021.2003319
• Languages: English
• ISSNs: 0034-3404

Abstract

ABSTRACT: We evaluate the effectiveness of the most extensive experiment of income redistribution, that is, the European Union regional policy, at a time of economic crisis. By exploiting geographical discontinuities in fund eligibility, we analyse comprehensive data on all publicly funded Italian projects at the municipality level. We find a positive impact of localized support to firms with a sizable increase in employment and the number of plants in intensively treated areas. The result is an important policy lesson concerning the effects of place-based policies at a time of a long-lasting recession, such as that engendered by the Covid-19 crisis.