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

Julia Bachtrögler-Unger

Publication: Working/Discussion PaperWU Working Paper

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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.
Original languageEnglish
Publication statusPublished - 2016

Publication series

NameDepartment of Economics Working Paper Series
No.230

Austrian Classification of Fields of Science and Technology (ÖFOS)

  • 506004 European integration
  • 502046 Economic policy
  • 502018 Macroeconomics

WU Working Paper Series

  • Department of Economics Working Paper Series

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