Place-based policy effectiveness is one of the most heatedly debated issues among regional economists. The most divisive question on this topic is whether such policies represent just a means to keep alive lagging areas or whether they are capable of putting deprived regions to a higher growth trajectory on a permanent basis. We answer to such a question by investigating what happens when strongly subsidized regions suddenly experience a substantial reduction in external funding. On this matter, the EU regional policy is the ideal policy to analyze, considering that in each programming period, some regions exit the Convergence status and start receiving considerably less funding. In this paper, we analyze an extremely rich database and adopt the mean balancing approach, an econometric technique appositely created for fully exploiting the information contained in time-series cross-sectional (TSCS) data, to estimate the ATT. Such an approach allows us also to investigate the heterogeneity of the impact concerning relevant covariates. Our preliminary findings signal a long-term positive effect of the EU funds on growth and employment.
