No. 1253 - Place-based Policy and Local TFP

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by Giuseppe Albanese, Guido de Blasio and Andrea LocatelliDecember 2019

This paper estimates the impact of the European regional development fund (ERDF) on the growth of total factor productivity in the local labor markets (LLMs) of Southern Italy between 2007 and 2015. The use of LLMs as units of observation allows us to account for possible externalities (spillovers and agglomeration economies).

While the effect of the European regional development fund on firms' productivity was nil on average, we find some heterogeneity between items of expenditure. Infrastructure spending (about half of the total) had a positive impact, while spending on firm subsidies (20 per cent) and on purchases of goods and services (30 per cent) did not. European spending was more effective in areas characterized by better institutional quality and a higher degree of urbanization.

Forthcoming in: Papers in Regional Science

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