von Ehrlich, Maximilian; Seidel, Tobias (April 2016). The persistent effects of place-based policy: Evidence from the West-German Zonenrandgebiet (CRED Research Paper 9). Bern: CRED - Center for Regional Economic Development
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We show that temporary place-based subsidies generate persistent effects on economic density. As our design allows us to control for agglomeration economies, we attribute an important role to policy-induced locational advantage (e.g. capital structures) in explaining persistent spatial patterns of economic activity. With regard to distributional implications, we show that subsidies have capitalized in land rents, so pre-treatment land owners have benefitted predominantly from the program.
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