Place Based Policies with Local Voting. Lessons from the EU Cohesion Policy"
Abstract:
I study place based policies under local political economy constraints, asking whether transfers across regions can foster regional convergence. I show that, if local workers can vote over th e within-region allocation of the transfers, these may be spent unproductiv ely and be ineffective in supporting growth - especially where growth is mo st needed. Due to migration responses to transfers, they may even have unin tended consequences and be harmful for economic growth in poorer regions. T hese conclusions follow even though voters are assumed to be fully sophisti cated and to anticipate the general equilibrium consequences of the policy. Using data on the EU Cohesion Policy in 2007-13, I show that, in regions w ith many low skilled workers, funds are significantly less likely to be inv ested in technological development, innovation, and research. In line with the theory, this occurs only when regional authorities are among the manage rs of the funds, but not when these are managed by national authorities, wh o do not cater to local voters.
DTSTAMP:20260620T163554Z DTSTART:20210903T130000Z DTEND:20210903T140000Z SEQUENCE:0 TRANSP:OPAQUE END:VEVENT END:VCALENDAR