Absorptive Capacity and the Growth and Investment Effects of Regional Transfers: A Regression Discontinuity Design with Heterogeneous Treatment Effects
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Abstract
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.Citation
Becker, Sascha O., Peter H. Egger, and Maximilian von Ehrlich. 2013. "Absorptive Capacity and the Growth and Investment Effects of Regional Transfers: A Regression Discontinuity Design with Heterogeneous Treatment Effects." American Economic Journal: Economic Policy, 5 (4): 29-77. DOI: 10.1257/pol.5.4.29Additional Materials
JEL Classification
- C21 Single Equation Models; Single Variables: Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions
- F35 Foreign Aid
- H23 Taxation and Subsidies: Externalities; Redistributive Effects; Environmental Taxes and Subsidies
- H77 Intergovernmental Relations; Federalism; Secession
- R11 Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
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