Short-term Impact of Financial Support to Inner Areas

Abstract This paper examines the short-term effects of financial support provided to Inner Areas through a specific place-based governmental policy that was introduced in Italy between 2014 and 2018 to combat depopulation. Taking advantage of the most recent developments in the econometrics of policy evaluation, we apply a staggered difference-in-difference estimator to evaluate the impact of public policy on population structure and the number of plants at the municipal level. The analysis is made possible thanks to a detailed panel dataset containing information about the Italian municipalities over the years 2014–2020. The results show that, over the first 2 years, the financial support to Inner Areas does not affect the population structure, but it can generate a significant number of extra plants in the treated municipalities. A further key issue is whether the policy can generate spillover effects on neighbours which may either corroborate the result or invalidate it. To answer this question we combine the baseline model with a spatial empirical strategy, and we find positive spillover effects for extra plants on neighbouring municipalities.