Abstract: We study the effects of place-based policies on aggregate productivity using administrative data on projects co-financed by the EU in Italy linked to balance sheet data. We exploit quasi-experimental variation in funding for a large place-based policy stemming from measurement error in regional GDP estimates. Results show that the policy likely decreases productivity. Decompositions reveal that aggregate declines are driven by reallocation of labor to low-productivity firms. Mechanism analysis using firm-level event studies reveals that negative reallocation effects are caused by high-productivity firms taking up the funds and subsequently becoming more liquidity constrained, leading to slowdowns in employment growth.

Abstract:  This paper documents substantial fiscal waste in the context of one the world’s largest regional development programs -- the EU Cohesion Policy. We study Italy, and find that 20\% of funding commitments are never paid out and funneled into unfinished or never-started projects. In our setting, this happens for reasons unrelated to fiscal constraints -- municipalities appear to simply leave money on the table. Foregone spending is more prevalent in Southern regions, but there is also stark variation across municipalities within regions. We show that such under-utilization of available funds is likely due to limited administrative capacity of local governments.

Abstract: To study the distribution of economic activity across space and place-based policies, I develop a model of the location choice of new establishments incorporating monopsonistic labor markets and taxes. Reduced-form estimates of a model-derived equation using German administrative data indicate that establishments prefer lower taxes, but the degree to which worker outside options matter in the location decision varies between industries. I also quantify the effects of a counterfactual place-based tax incentive and find that a commuting zone's response to the place-based policy depends on the degree of labor market power in that commuting zone. More monopsonistic labor markets derive greater benefit from the place-based policy.

Abstract: The fraction of the US workforce identified as involuntary part-time workers rose to new highs during the US Great Recession and came down only slowly in its aftermath. We assess the determinants of involuntary part-time work using an empirical framework that accounts for business cycle effects and persistent structural features of the labor market. We conduct regression analyses using state-level panel data for the years 2003–16. The results indicate that structural factors, notably shifts in the industry composition of employment, have held the incidence of involuntary part-time work slightly more than 1 percentage point above its prerecession level.