Absorptive Capacity and the Growth and Investment Effects of Regional Transfers: A Regression Discontinuity Design with Heterogeneous Treatment Effects

Researchers often estimate average treatment effects of programs without investigating heterogeneity across units. Yet, individuals, firms, regions, or countries vary in their ability to utilize transfers. We analyze Objective 1 transfers of the EU to regions below a certain income level by way of a...

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Bibliographic Details
Published in:American economic journal. Economic policy 2013-11, Vol.5 (4), p.29-77
Main Authors: Becker, Sascha O., Egger, Peter H., von Ehrlich, Maximilian
Format: Article
Language:English
Subjects:
Absorptive capacity
Countries
Econometrics
Economic growth
Economic policy
Economic regions
Education
Endowments
European Commission
Financial investments
Government spending
Gross domestic product
Human capital
Investment income
Macroeconomics
Per capita
Polynomials
Regions
Regression analysis
Standard error
Statistical analysis
Technology adoption
Transfers
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Summary:Researchers often estimate average treatment effects of programs without investigating heterogeneity across units. Yet, individuals, firms, regions, or countries vary in their ability to utilize transfers. We analyze Objective 1 transfers of the EU to regions below a certain income level by way of a regression discontinuity design with systematically varying heterogeneous treatment effects. Only about 30 percent and 21 percent of the regions—those with sufficient human capital and good-enough institutions—are able to turn transfers into faster per capita income growth and per capita investment, respectively. In general, the variance of the treatment effect is much bigger than its mean.
ISSN:1945-7731
1945-774X
DOI:10.1257/pol.5.4.29