Absorptive capacity and the growth and investment effects of regional transfers: a regression discontinuity design with heterogeneous treatment effects

By Sascha O. Becker, Peter H. Egger, Maximilian Von Ehrlich

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127 Citations (Scopus)


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 about30 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. (JEL C21, F35, H23, H77, R11).

Original languageEnglish
Pages (from-to)29-77
Number of pages49
JournalAmerican Economic Journal: Economic Policy
Issue number4
Publication statusPublished - Nov 2013
Externally publishedYes

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