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Ruhr Economic Papers #966


José Mesquita, João Pereira dos Santos, José Tavares

European Funds and Firm Performance: Evidence from a Natural Experiment

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 a redrawing of administrative areas 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 to be 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.

ISBN: 978-3-96973-130-7

JEL-Klassifikation: C21, R10

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