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Abstract:

Journal article
The effects of supporting local business: evidence from the UK
Elias Einiö and Henry Overman
July 2020
Paper No' :


Tags: uk economy; employment; inequality; economic geography

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.