The Impact of EU Objective 1 Funds on Regional Development: Evidence from the U.K. And the Prospect of Brexit

26 Pages Posted: 13 Nov 2017

See all articles by Marco Di Cataldo

Marco Di Cataldo

London School of Economics & Political Science (LSE) - Department of Geography and Environment; Ca' Foscari University of Venice, Department of Economics

Date Written: November 2017

Abstract

Brexit means that regions of the United Kingdom will lose access to the EU Cohesion Policy. Have EU funds been effective, and what might be the consequences of an interruption of EU financial support? This paper studies the impact of “Objective 1” funding—the highest form of EU aid—in Cornwall and South Yorkshire, two of the U.K.’s most subsidized regions. Counterfactual methodologies assessing their labor market and economic performance provide evidence of a positive effect of EU Objective 1 funds. When in 2006 South Yorkshire lost Objective 1 eligibility, this massively reduced its share of EU funds and the region was unable to sustain the gains obtained in previous years. This suggests that while Structural Funds may be effectively improving socio‐economic conditions of poorer regions, the performance of subsidized areas could be deeply affected by a reduction (or worse, an interruption) of EU aid.

Keywords: Brexit, EU Cohesion Policy, Objective 1, synthetic control method, U.K

Suggested Citation

Di Cataldo, Marco, The Impact of EU Objective 1 Funds on Regional Development: Evidence from the U.K. And the Prospect of Brexit (November 2017). Journal of Regional Science, Vol. 57, Issue 5, pp. 814-839, 2017, Available at SSRN: https://ssrn.com/abstract=3069167 or http://dx.doi.org/10.1111/jors.12337

Marco Di Cataldo (Contact Author)

London School of Economics & Political Science (LSE) - Department of Geography and Environment ( email )

Houghton Street
London, WC2A 2AE
United Kingdom

Ca' Foscari University of Venice, Department of Economics ( email )

Cannaregio 873
Venice, Veneto 30121
Italy

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