Going NUTS: The effect of EU structural funds on regional performance

Becker, Sascha O.; Egger, Peter H.; v. Ehrlich, Maximilian (2010). Going NUTS: The effect of EU structural funds on regional performance. Journal of public economics, 94(9-10), pp. 578-590. Elsevier 10.1016/j.jpubeco.2010.06.006

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The European Union (EU) provides grants to disadvantaged regions of member states to allow them to catch up with the EU average. Under the Objective 1 scheme, NUTS2 regions with a per capita GDP level below 75% of the EU average qualify for structural funds transfers from the central EU budget. This rule gives rise to a regression-discontinuity design that exploits the discrete jump in the probability of EU transfer receipt at the 75% threshold for identification of causal effects of Objective 1 treatment on outcome such as economic growth of EU regions. We find positive per capita GDP growth effects of Objective 1 transfers, but no employment growth effects.

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