%0 Report
%9 EIC working paper series
%A Fattorini, Loredana
%A Ghodsi, Mahdi
%A Rungi, Armando
%D 2018
%F eprints:3893
%I IMT School for Advanced Studies Lucca
%K Keywords: firm performance, total factor productivity, cross-country analysis, convergence,  regional policy.  -    JEL Classification Numbers: D22, D24, E23, F15, L25.
%N 2
%T Cohesion Policy Meets Heterogeneous Firms
%U http://eprints.imtlucca.it/3893/
%X In this paper, we empirically test the effects of the EU ‘cohesion policy’ on the performance of  about 500,000 European manufacturing firms after combining regional policy data at NUTS-  2 level with firm-level data. In a framework of heterogeneous firms and different absorptive  capacity of regions, we show that financing of ‘cohesion policy’ by European Regional Development  Fund (ERDF) aimed at direct investments in R&D correlates with improvement of firms’  productivity in a region. Conversely, funding designed at overall Business Support correlates  with negative productivity growth rates. In both cases, we registered an asymmetric impact  along the firms’ productivity distribution, where a stronger impact can be detected in the first  quartile, i.e. less efficient firms in a region. We finally argue that considering the heterogeneity  of firms allows a better assessment of the impact of ‘cohesion policy’ measures.