EU Cohesion Policies between Effectiveness and Equity: An Analysis of Italian Municipalities

Baraldi, Anna Laura and Cantabene, Claudia and De Iudicibus, Alessandro and Fosco, Giovanni (2024): EU Cohesion Policies between Effectiveness and Equity: An Analysis of Italian Municipalities.

Abstract

The allocation of funds to finance cohesion policies has been a significant European and national level activity. We focus on the 2007-2013 and 2014-2020 programming periods within a 23-year (2000 to 2022) time frame to assess whether and how cohesion funds have affected per-capita income growth rates in the municipalities in the Objective 1 Italian regions of Calabria, Campania, Apulia, and Sicily. We use static and dynamic difference-in-differences methodologies. Municipal level examination allows us to filter out the distorting effects generated by characteristics typical of those countries whose regions have benefited from the allocation of structural funding. The literature shows that structural funding causes contrasting effects on various economic variables. We found significant increases in municipal per-capita income growth rates in the treated compared to the control group of municipalities, with increased effects starting from the 10th year after the first payment. We interpret our results in terms of income inequality; we show that funding causes a rise in both the Gini and Atkinson inequality indexes. This suggests that while EU cohesion funds have been effective for promoting income growth, they have not improved equity.

• Item Type: MPRA Paper
• Language: English
• Keywords: Cohesion Policies, Diff-in-Diff, Objective 1 Regions, Income growth, Inequalities
• Subjects: C - Mathematical and Quantitative Methods > C2 - Single Equation Models ; Single Variables > C21 - Cross-Sectional Models ; Spatial Models ; Treatment Effect Models ; Quantile Regressions; C - Mathematical and Quantitative Methods > C2 - Single Equation Models ; Single Variables > C22 - Time-Series Models ; Dynamic Quantile Regressions ; Dynamic Treatment Effect Models ; Diffusion Processes; R - Urban, Rural, Regional, Real Estate, and Transportation Economics > R1 - General Regional Economics > R11 - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes; R - Urban, Rural, Regional, Real Estate, and Transportation Economics > R1 - General Regional Economics > R15 - Econometric and Input-Output Models ; Other Models

References

Albanese, G., G. de Blasio, and A. Locatelli (2021). Does eu regional policy promote local tfp growth? evidence from the italian mezzogiorno. Papers in Regional Science 100 (2), 327–349.

Arbolino, R., P. Di Caro, and U. Marani (2020). Did the governance of eu funds help italian regional labour markets during the great recession? JCMS: Journal of Common Market Studies 58 (2), 235–255.

Arnaoutoglou, N.-B. (2021). Institutions & cohesion policy. Studies in the 24, 9.

Atella, V., M. Braione, G. Ferrara, and G. Resce (2023). Cohesion policy funds and local government autonomy: Evidence from italian municipalities. Socio-Economic Planning Sciences 87, 101586.

Bachtro¨gler, J., U. Fratesi, and G. Perucca (2020). The influence of the local context on the implementation and impact of eu cohesion policy. Regional Studies 54 (1), 21–34.

Becker, S. O., P. H. Egger, and M. Von Ehrlich (2013). Absorptive capacity and the growth and investment effects of regional transfers: A regression discontinuity design with hetero- geneous treatment effects. American Economic Journal: Economic Policy 5 (4), 29–77.

Becker, S. O., P. H. Egger, and M. Von Ehrlich (2018). Effects of eu regional policy: 1989- 2013. Regional Science and Urban Economics 69, 143–152.

Berkowitz, P., P. Monfort, and J. Pien´kowski (2020). Unpacking the growth impacts of european union cohesion policy: Transmission channels from cohesion policy into economic growth. Regional Studies.

Boldrin, M. and F. Canova (2001). Inequality and convergence in europe’s regions: recon- sidering european regional policies. Economic policy 16 (32), 206–253.

Borusyak, K. (2023). Did imputation: Stata module to perform treatment effect estimation and pre-trend testing in event studies.

Borusyak, K., X. Jaravel, and J. Spiess (2021). Revisiting event study designs: Robust and efficient estimation. arXiv preprint arXiv:2108.12419 .

Bourdin, S. (2019). Does the cohesion policy have the same influence on growth everywhere? a geographically weighted regression approach in central and eastern europe. Economic Geography 95 (3), 256–287.

Bourguignon, F. and M. Sundberg (2006). Constraints to achieving the mdgs with scaled-up aid.

Brandsma, A., d. Kancs, P. Monfort, and A. Rillaers (2015). Rhomolo: A dynamic spatial general equilibrium model for assessing the impact of cohesion policy. Papers in Regional Science 94, S197–S221.

Cerqua, A. and G. Pellegrini (2018). Are we spending too much to grow? the case of structural funds. Journal of Regional Science 58 (3), 535–563.

Cerqua, A. and G. Pellegrini (2023). I will survive! the impact of place-based policies when public transfers fade out. Regional Studies 57 (8), 1605–1618.

Ciani, E. and G. De Blasio (2015). European structural funds during the crisis: evidence from southern italy. IZA Journal of Labor Policy 4, 1–31.

Coccorese, P. and R. Dell’Anno (2024). The role of banks in shaping income inequality: A within-country study. Review of Income and Wealth 70 (1), 129–153.

Coppola, G. and S. Destefanis (2015). Structural funds and regional convergence: Some sectoral estimates for italy. Geographical labor market imbalances: Recent explanations and cures, 307–333.

Coppola, G., S. Destefanis, G. Marinuzzi, and W. Tortorella (2020). European union and nationally based cohesion policies in the italian regions. Regional Studies.

Cowell, F. A. (2011). Measuring inequality. Oxford University Press.

Crescenzi, R., U. Fratesi, and V. Monastiriotis (2020). Back to the member states? cohesion policy and the national challenges to the european union.

Crescenzi, R. and M. Giua (2016). The eu cohesion policy in context: Does a bottom-up approach work in all regions? Environment and Planning A: Economy and Space 48 (11), 2340–2357.

Crucitti, F., N.-J. Lazarou, P. Monfort, and S. Salotti (2024). The impact of the 2014–2020 european structural funds on territorial cohesion. Regional Studies 58 (8), 1568–1582.

De Chaisemartin, C. and X. d’Haultfoeuille (2020). Two-way fixed effects estimators with heterogeneous treatment effects. American Economic Review 110 (9), 2964–96.

Di Caro, P. and U. Fratesi (2022). One policy, different effects: Estimating the region-specific impacts of eu cohesion policy. Journal of Regional Science 62 (1), 307–330.

Ferrara, A. R., L. Dijkstra, P. McCann, and R. Nistic´o (2022). The response of regional well-being to place-based policy interventions. Regional Science and Urban Economics 97, 103830.

Fratesi, U. and G. Perucca (2019). Eu regional development policy and territorial capital: A systemic approach. Papers in Regional Science 98 (1), 265–282.

Fratesi, U., G. Perucca, et al. (2014). Territorial capital and the effectiveness of cohesion policies: An assessment for cee regions. Investigaciones Regionales 29, 165–191.

Giua, M. (2017). Spatial discontinuity for the impact assessment of the eu regional policy: The case of italian objective 1 regions. Journal of Regional Science 57 (1), 109–131.

Goodman-Bacon, A. (2021). Difference-in-differences with variation in treatment timing. Journal of Econometrics 225 (2), 254–277. Themed Issue: Treatment Effect 1.

Kersan Sˇkabi´c, I. and L. Tijani´c (2017). Regional abrorption capacity of eu funds. Economic research-Ekonomska istraˇzivanja 30 (1), 1192–1208.

Lang, V., N. Redeker, and D. Bischof (2022). Place-based policies and inequality within regions. OSF Preprints 3.

Le Gallo, J., S. Dall’Erba, and R. Guillain (2011). The local versus global dilemma of the effects of structural fund s. Growth and Change 42 (4), 466–490.

Martin, R. and P. Tyler (2006). Evaluating the impact of the structural funds on objective 1 regions: An exploratory discussion. Regional Studies 40 (02), 201–210.

Midelfart-Knarvik, K. H. and H. G. Overman (2002). Delocation and european integration: is structural spending justified? Economic policy 17 (35), 321–359.

Mohl, P. and T. Hagen (2010). Do eu structural funds promote regional growth? new evi- dence from various panel data approaches. Regional Science and Urban Economics 40 (5), 353–365.

Pellegrini, G., F. Terribile, O. Tarola, T. Muccigrosso, and F. Busillo (2013). Measuring the effects of european regional policy on economic growth: A regression discontinuity approach. Papers in Regional Science 92 (1), 217–234.

Percoco, M. (2017). Impact of european cohesion policy on regional growth: does local economic structure matter? Regional Studies 51 (6), 833–843.

Pien´kowski, J. and P. Berkowitz (2016). Econometric assessments of cohesion policy growth effects: how to make them more relevant for policymakers? In EU cohesion policy, pp. 55–68. Routledge.

Pupo, V. and F. Aiello (2009). L’impatto della politica regionale dell’unione europea. uno studio sulle regioni italiane. Rivista italiana degli economisti 14 (3), 421–454.

Rodr´Iguez-Pose*, A. and U. Fratesi (2004). Between development and social policies: the impact of european structural funds in objective 1 regions. Regional studies 38 (1), 97–113.