DP17362 European Funds and Firm Performance: Evidence from a Natural Experiment
|Author(s):||José Mesquita Gabriel, João Pereira dos Santos, José Tavares|
|Publication Date:||June 2022|
|Keyword(s):||European funds, firm performance, municipalities, quasi-natural experiment|
|Programme Areas:||Public Economics|
|Link to this Page:||cepr.org/active/publications/discussion_papers/dp.php?dpno=17362|
Expanding regional eligibility in the access to grants can have important consequences for the performance of firms. We examine a quasi-natural experiment that consisted of an administrative redistricting intended to increase accessibility to European Union (EU) funds using a rich administrative dataset that covers the universe of Portuguese private firms between 2003 and 2010. Our results uncover a positive causal impact of increased eligibility on firms' sales. In contrast, employment and labour productivity do not seem significantly impacted by the reform. The effects are heterogeneous: while sales of firms in the services and non-tradable sectors are positively impacted, sales of firms in more competitive sectors are not affected.