Quasi-Experimental Methods in Empirical Regional Science and Policy Analysis – Is There a Scope for Application?

25 Pages Posted: 11 Oct 2012

See all articles by Timo Mitze

Timo Mitze

Gesellschaft für Okonomische Regionalanalysen (GEFRA)

Alfredo R. Paloyo

Rhine-Westphalia Institute for Economic Research (RWI-Essen); Ruhr University of Bochum; University of Wollongong

Björn Alecke

GEFRA

Date Written: September 1, 2012

Abstract

Applied econometrics has recently emphasized the identification of causal parameters for policy analysis. This revolution has yet to fully propagate to the field of regional science. We examine the scope for application of the matching approach – part of the modern applied econometrics toolkit – in regional science and highlight special features of regional data that make such an application difficult. In particular, our analysis of the effect of regional subsidies on labor-productivity growth in Germany indicates that such policies are effective, but only up to a certain maximum treatment intensity. Although the matching approach is very appealing due to its methodological rigor and didactical clarity, we faced difficulties in balancing the set of covariates for our regional data given that the regions differ strongly with respect to the underlying structural characteristics. Thus, results have to be interpreted with some caution. The matching approach nevertheless can be of great value for regional policy analysis and should be the subject of future research efforts in the field of empirical regional science.

Keywords: generalized propensity score, nearest neighbor matching, labor productivity growth, regional policy

JEL Classification: C21, R11, R58

Suggested Citation

Mitze, Timo and Paloyo, Alfredo R. and Alecke, Björn, Quasi-Experimental Methods in Empirical Regional Science and Policy Analysis – Is There a Scope for Application? (September 1, 2012). Ruhr Economic Paper No. 367, Available at SSRN: https://ssrn.com/abstract=2159708

Timo Mitze (Contact Author)

Gesellschaft für Okonomische Regionalanalysen (GEFRA) ( email )

Salzmannstr. 152
48159 Muenster
Germany

Alfredo R. Paloyo

Rhine-Westphalia Institute for Economic Research (RWI-Essen) ( email )

Hohenzollernstr. 1-3
Essen, 45128
Germany

Ruhr University of Bochum ( email )

Bochum, 44780
Germany

University of Wollongong ( email )

Northfields Avenue
Wollongong, New South Wales 2522
Australia

Björn Alecke

GEFRA ( email )

Ludgeristr. 56
48143 Muenster
Germany

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