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Who Benefits from Place-based Policies? Evidence from Matched Employer-Employee Data

Philipp Grunau, Florian Hoffmann, Thomas Lemieux, Mirko Titze
IWH Discussion Papers, No. 11, 2024
Abstract
We study the wage and employment effects of a German place-based policy using a research design that exploits conditionally exogenous EU-wide rules governing the program parameters at the regional level. The place-based program subsidizes investments to create jobs with a subsidy rate that varies across labor market regions. The analysis uses matched data on the universe of establishments and their employees, establishment-level panel data on program participation, and regional scores that generate spatial discontinuities in program eligibility and generosity. These rich data enable us to study the incidence of the place-based program on different groups of individuals. We find that the program helps establishments create jobs that disproportionately benefit younger and less-educated workers. Funded establishments increase their wages but, unlike employment, wage gains do not persist in the long run. Employment effects estimated at the local area level are slightly larger than establishment-level estimates, suggesting limited spillover effects. Using subsidy rates as an instrumental variable for actual subsidies indicates that it costs approximately EUR 25,000 to create a new job in the economically disadvantaged areas targeted by the program.
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A Multi-Model Assessment of Inequality and Climate Change

Marie Young-Brun, et al.
Research Square, 2024
Abstract

Climate change and inequality are critical and interrelated defining issues for this century. Despite growing empirical evidence on the economic incidence of climate policies and impacts, mainstream model-based assessments are often silent on the interplay between climate change and economic inequality. For example, all the major model comparisons reviewed in IPCC neglect within-country inequalities. Here we fill this gap by presenting a model ensemble of eight large-scale Integrated Assessment Models belonging to different model paradigms and featuring economic heterogeneity. We study the distributional implications of Paris-aligned climate target of 1.5 degree and include different carbon revenue redistribution schemes. Moreover, we account for the economic inequalities resulting from residual and avoided climate impacts. We find that price-based climate policies without compensatory measures increase economic inequality in most countries and across models. However, revenue redistribution through equal per-capita transfers can offset this effect, leading to on average decrease in the Gini index by almost two points. When climate benefits are included, inequality is further reduced, but only in the long term. Around mid-century, the combination of dried-up carbon revenues and yet limited climate benefits leads to higher inequality under the Paris target than in the Reference scenario, indicating the need for further policy measures in the medium term.

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Centre for Evidence-based Policy Advice

Centre for Evidence-based Policy Advice (IWH-CEP) The Centre for Evidence-based Policy Advice (IWH-CEP) of the IWH was founded in 2014. It is a platform that bundles and…

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Homepage

IWH Summer Forecast The German economy is still on the defensive, but signs of an end to the downturn are increasing. Production expands only modestly during summer. From the…

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Charts

Info Graphs Sometimes pictures say more than a thousand words. Therefore, we selected a few graphs to present our main topics visually. If you should have any questions or would…

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Financial Stability

Financial Systems: The Anatomy of the Market Economy How the financial system is constructed, how it works, how to keep it fit and what good a bit of chocolate can do. Dossier In…

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EVA-KULT

EVA-KULT Establishing Evidence-based Evaluation Methods for Subsidy Programmes in Germany The project aims at expanding the Centre for Evidence-based Policy Advice at the Halle…

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PD Dr Mirko Titze –

PD Dr Mirko Titze Current Position since 4/14 Head of the Centre for Evidence-based Policy Advice (IWH-CEP) Halle Institute for Economic Research (IWH) – Member of the Leibniz…

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Anniversary 2017

Anniversary 2017 25 years IWH. Highlights and turning points. A quarter of a century ago, our employees started to work for IWH. What has happened from then until now? Content 25…

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Jobs at IWH

Vacancies at IWH The Halle Institute for Economic Research (IWH) – Member of the Leibniz Association was founded in 1992. IWH’s tasks are economic research and science-based…

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