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The Role Of Fiscal Transfers For Regional Economic Convergence In Europe

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Executive Summary

This paper provides evidence on the role of net fiscal transfers to households and EU structural funds for per-capita output convergence across a large sample of European regions during the period 1995-2005. The authors find that net fiscal transfers, while achieving regional redistribution, seem to impede output growth and promote an "Immiserising convergence": output growth rates in poor receiving regions decline by less than in rich paying regions. EU structural and cohesion funds spent during 1994-1999 had a positive, but slight, impact on future economic growth, mainly through the human development component.

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