Discussion paper
DP16696 Institutional Integration and Productivity Growth: Evidence from the 1995 Enlargement of the European Union
This paper studies the productivity effects of integration deepening. The identification
strategy exploits the 1995 European Union (EU) enlargement, when all candidate countries
joined the Single Market but one — Norway — did not join the EU. Our synthetic
difference-in-differences estimates on sectoral and regional data suggest had Norway chosen
deeper integration, the average Norwegian region would have experienced an increase
in yearly productivity growth of about 0.6 percentage points. This method also helps determining
the sources of heterogeneity, apparently inherent to integration, highlighting higher
costs of the missed deeper integration for more peripheral regions and industrial sector.
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