Work in progress

The European Regional policy touches all parts of the EU, at all levels from national to regional and local communities, with a focus on the poorest regions. Its average impact on growth and economic performance has long remained controversial. In this paper, we focus on the heterogeneity of regional responses to this policy. We enlarge the policy analysis to a Quantile Regression Discontinuity Design and we find that the European Regional Policy, through the Objective 1 program, does impact the distributions of GDP and employment growth rates, research and development efforts and, to a lower extent, highways density in lagged regions.

Keywords: Quantile treatment effect, Regression discontinuity, European Regional Policy.

JEL codes: R11, C14, C21, R58.

This article explores the relationship between city size and unemployment volatility. We present a new mechanism of risk sharing between firms and workers located in the the same labor market. Our model reveals that economic shocks and local unemployment can be mitigated by the city size. We exploit a quasi-natural experiment by studying the economic impact of 12 French air force base closures to test the prediction of our model. We use synthetic control methods and interactive fixed effects to construct a credible counterfactual for each employment zone which experienced a closure. By analyzing quarterly local unemployment data, we show that air base closures increase local unemployment. Despite that air base closure lead to a rise in local unemployment in quarters following the closure, on average areas absorb negative shock in 14 quarters. Moreover, our results reveal some heterogeneity in the local economy's resilience. In line with our theoretical model, we show that city size is a relevant explanation for the observed heterogeneity in resilience: the unemployment rate is less affected in denser area by a relative equal-sized shift in labor demand.

In this article, we assess how an active labor market policy affects the potential outcomes of those not assigned to the program. We use a two-stage randomized experiments carry out by the French Ministry of Employment and conducted at the ALE level (administrative zoning). The design of this experiment solve a number of identification issues. However some threats to identification remain. One of the crucial hypotheses of group-randomized trials is the absence of externalities between local labor markets. Regional economies are highly integrated, and it is very likely that unemployment externalities cross administrative borders. Results may be dependent on the shape of the local spatial unit. To tackle this issue, for each unemployed in the program, we build zoning depicting areas of prospecting whose size varies from 15 to 60 minutes. Moreover, the literature does not provide definitive guidance about functional relationship between labor market outcomes and local characteristics. Results may be sensitive to a change of the functional form. We explore this issue by using Generalized Additive Models. Our empirical investigations do not reveal clear evidences of displacement effects in general. However, we find evidences of treatment heterogeneity regarding the local context. Increasing the local level of assignment in prosperous local markets does not cause high displacement effects. At the opposite, for deprived labor markets an increase in the local level of assignment lead to high displacement effects.

This paper explores the role of agglomeration externalities on firms training offer. We aim to understand why firms train less in denser areas. Two mechanisms can explain this stylized fact: (i) because of the poaching of trained workers, firms may train less in denser local labour markets, (ii)  matching and learning effects lessen the firm training needs of workers to acquire new skills. To arbitrate between those two explanations, we construct two proxies for poaching effects: firm turnover and turnover in the local labour market. When controlling for poaching with those two measures, we still find employment density to have a negative and significant effect on firm provided training. This implies matching and learning effects are more likely to be responsible for the negative effect of employment density on training than poaching effects.

In this study, we investigate the impact of an exogenous source of income support variation related to Less Favored Areas (LFA) and the grassland premium (PHAE) on farms' technical efficiency (TE), environmental efficiency (EE), and grassland share in France. We utilize the 2015 CAP reform, which serves as a natural experiment since it affects three groups of farms differently. We employ a combination of difference-in-differences and inverse propensity score weighting, comparing farms that benefited from an increase in LFA payments ("winners") to farms that did not experience a change ("neutrals"). We also compared farms that suffered from the loss of the grassland premium ("losers") to neutral farms. Our findings suggest that the variation in income support has led to a reduction in both TE and EE of farms, as well as a decrease in grassland share, with the latter being statistically insignificant for both "winners" and "losers".

Keywords: Less Favored Area, Grassland Premium, Technical Efficiency, Environmental Efficiency, France.  

JEL Codes: Q12, Q15, Q18, Q57, C31.