The (Displacement) Effects of Spatially Targeted Enterprise Initiatives: Evidence from UK LEGI

41 Pages Posted: 17 Feb 2016

See all articles by Elias Einiö

Elias Einiö

VATT Institute for Economic Research

Henry G. Overman

London School of Economics (LSE) - Department of Geography and Environment; Centre for Economic Policy Research (CEPR)

Date Written: February 2016

Abstract

We investigate the impacts of a significant area-based intervention (LEGI) that aimed to increase employment and entrepreneurial activity in 30 disadvantaged areas across England. We examine the spatial pattern of effects at a fine spatial scale using panel data for small geographic units and a regression discontinuity design that exploits the programme eligibility rule. The results indicate considerable local displacement effects. Employment increases in treated areas close to the treatment area boundary at the cost of significant employment losses in untreated localities just across the boundary. These differences vanish quickly when moving away from the boundary and do not persist after the programme is abolished. These findings support the view that area-based interventions may have considerable negative displacement effects on untreated parts of the economy. This displacement can substantially reduce (or in this case eliminate) any net benefits.

Keywords: displacement, employment, place-based policy, programme evaluation

JEL Classification: H25, J20, O40, R11

Suggested Citation

Einiö, Elias and Overman, Henry G., The (Displacement) Effects of Spatially Targeted Enterprise Initiatives: Evidence from UK LEGI (February 2016). CEPR Discussion Paper No. DP11112, Available at SSRN: https://ssrn.com/abstract=2733085

Elias Einiö (Contact Author)

VATT Institute for Economic Research

Arkadiankatu 7
Helsinki, Uusimaa 00180
Finland

Henry G. Overman

London School of Economics (LSE) - Department of Geography and Environment ( email )

Houghton Street
London, WC2A 2AE
United Kingdom
+44 20 7955 6581 (Phone)
+44 20 7955 7412 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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