The Persistent Effects of Place-Based Policy: Evidence from the West-German Zonenrandgebiet

v. Ehrlich, Maximilian; Seidel, Tobias (2018). The Persistent Effects of Place-Based Policy: Evidence from the West-German Zonenrandgebiet. American economic journal. Economic policy, 10(4), pp. 344-374. American Economic Association 10.1257/pol.20160395

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Using a natural experiment, we show that temporary place-based subsidies generate persistent effects on economic density. The spatial regression discontinuity design controls for continuous local agglomeration externalities, so we attribute an important role to capital formation in explaining persistent spatial patterns of economic activity. This persistence is driven by higher local public investment levels, which local governments could maintain after the end of the program because of a persistently higher tax base. We also find evidence for significant local relocation of economic activity, which raises doubts that the net effect of the policy is positive. Finally, we show that transfers have capitalized in land rents such that pretreatment land owners have benefited from the program.

Item Type:

Journal Article (Original Article)

Division/Institute:

03 Faculty of Business, Economics and Social Sciences > Department of Economics
03 Faculty of Business, Economics and Social Sciences > Department of Economics > Institute of Economics > Economic Policy and Regional Economics
03 Faculty of Business, Economics and Social Sciences > Department of Economics > Institute of Economics
03 Faculty of Business, Economics and Social Sciences > Department of Economics > Institute of Economics > Public Economics
11 Centers of Competence > Center for Regional Economic Development (CRED)

UniBE Contributor:

v. Ehrlich, Maximilian

Subjects:

300 Social sciences, sociology & anthropology > 330 Economics

ISSN:

1945-7731

Publisher:

American Economic Association

Language:

English

Submitter:

Melanie Moser

Date Deposited:

23 May 2019 13:46

Last Modified:

18 Jun 2019 15:59

Publisher DOI:

10.1257/pol.20160395

BORIS DOI:

10.7892/boris.127636

URI:

https://boris.unibe.ch/id/eprint/127636

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