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The effects of supporting local business: evidence from the UK

Einiö, Elias and Overman, Henry G. (2020) The effects of supporting local business: evidence from the UK. Regional Science and Urban Economics, 83. ISSN 0166-0462

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Identification Number: 10.1016/j.regsciurbeco.2019.103500

Abstract

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.

Item Type: Article
Official URL: https://www.journals.elsevier.com/regional-science...
Additional Information: © 2020 The Authors
Divisions: Geography & Environment
Subjects: H Social Sciences > HD Industries. Land use. Labor
JEL classification: R - Urban, Rural, and Regional Economics > R1 - General Regional Economics > R11 - Regional Economic Activity: Growth, Development, and Changes
H - Public Economics > H2 - Taxation, Subsidies, and Revenue > H25 - Business Taxes and Subsidies
J - Labor and Demographic Economics > J2 - Time Allocation, Work Behavior, and Employment Determination and Creation; Human Capital; Retirement > J20 - General
O - Economic Development, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity > O40 - General
Date Deposited: 17 Dec 2019 13:15
Last Modified: 06 Jul 2020 07:27
URI: http://eprints.lse.ac.uk/id/eprint/102935

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