The Effects of Supporting Local Business: Evidence from the UK
Einiö, Elias; Overman, Henry G. (2020)
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Overman, Henry G.
This paper assesses the effects of a significant place-based intervention that targeted local businesses in deprived areas in the UK. To gain identification, we use data at a fine spatial scale and a regression discontinuity design exploiting the eligibility deprivation rank rule based on a pre-determined deprivation index. We detect no overall effects on employment in treated areas but find a significant displacement of employment from nearby untreated areas, corresponding to around 10% of local employment. The results suggest that indirect displacement effects may substantially weaken the ability of local support programmes targeting the non-tradable sector to reduce economic inequality.
R11, H25, J20, O40
Employment, Business support, Local growth, Programme evaluation, Displacement, Regression discontinuity