Spatial Discontinuity for the Impact Assessment of the EU Regional Policy. The Case of Italian Objective 1 Regions

The capacity of the Regional Policy of the European Union (EU) to reduce the gap between the core and the periphery of the Union is still controversial. This paper revisits the question by exploiting treatment effect methods with a spatial approach never previ ously applied to the analysis of this policy. The spatial discontinuity represented by the administrative boundaries between‘Objective 1’ and ‘non-Objective 1’ regions makes it possible to estimate the causal impact of the EU Regional Policy on Italian ‘Objective 1’ regions where the EU has addressed a large amount of resources over the past decades. By focusing on the sub-sample of municipalities contiguous to the ‘policy-change boundary ’and by matching them according to the segment of the boundary of which they belong, the ‘Spatial RDD' model shows that the EU Regional Policy produced a positive impact on employment levels. The positive impact is concentrated in a specific set of economic sectors directly relevant to the policy action. In addition, there is no evidence of any displacement of resources away from other non-treated regions.