The Economics of European Regions: Theory, Empirics, and Policy (EERTEP)

The course of The Economics of European Regions: Theory, Empirics, and Policy introduces to some of the most current key issues of European Union (EU) both from a theoretical and applied perspective. It is composed by four main parts covering the growth and convergence/divergence among European regional economies, the design and the effectiveness of European Regional Policy, the coordination, and competition of fiscal policies, and finally, the effect of internal and external migration.

In particular, in the first part we will revise the theoretical models for the analysis of growth and con(di)vergence among European regions based on neoclassical theory and New Economic Geography. We will present evidence on the dynamics of output per capita, labour productivity, unemployment, and, in general, of living standards by advanced parametric and nonparametric techniques. We will deepen the roots of the EU disparities as technological spillovers, (re)allocation of factors, and differences in institutions and policies through spatial econometrics models.

In the second part we will illustrate the evolution of EU Regional Policy and how is financed through the EU budget. Special attention will be payed to European Structural Funds as support to regional growth and competitiveness. In particular, we will propose a theoretical framework to identify how regional development policies can affect convergence among European regions. Finally, we will discuss the problems arising in the quantitative evaluation of regional policy discussing the pros and cons of spatial econometric techniques vs counterfactual methods (e.g. regression discontinuity design).

In the third part, we will explore the economic background of taxation in EU in terms of both national and EU policy, distinguishing different types of taxes, taxation system, and their implications in terms of labour mobility, spatial location of activities, and household residential decisions. Finally, we will deepen the issues related to the coordination and competition of EU fiscal policies in the light of spatial interactions among the countries/regions’ decisions on taxation.

In the final part, we will focus on the analysis of the geographical mobility (commuting and migration) within and across EU countries and its potential for reducing regional disparities. We will examine theoretically and practically how migration alters the productivity of recipient regions and how labour market flexibility affects the departure of skilled workers. Finally, we will expose the evolution of EU policy on the movement of persons and present an evaluation of its impact on cross-border mobility within EU.