Can Regional Transfers Buy Public Support? Evidence from EU Structural Policy

Abstract

Die Dis cus si on Pape rs die nen einer mög lichst schnel len Ver brei tung von neue ren For schungs arbei ten des ZEW. Die Bei trä ge lie gen in allei ni ger Ver ant wor tung der Auto ren und stel len nicht not wen di ger wei se die Mei nung des ZEW dar.Dis cus si on Papers are inten ded to make results of ZEW research prompt ly avai la ble to other eco no mists in order to encou ra ge dis cus si on and sug gesti ons for revi si ons. The aut hors are sole ly respon si ble for the con tents which do not neces sa ri ly repre sent the opi ni on of the ZEW.Download this ZEW Discussion Paper from our ftp server:ftp://ftp.zew.de/pub/zew-docs/dp/dp11011.pdf Non-technical summaryThe theoretical literature suggests that upper-tier governments have an incentive to strategically allocate regional transfers in order to affect the electorate's opinion. This implies that citizens in targeted regions are aware of this intended benefit, and that they reward the benefactor for it. In this paper, the reaction of the citizens is studied, which has not found much consideration in the empirical literature until now. In particular, it focuses on the regional policy of the European Union (EU) as a special case of regional transfer policies with an immense scope and regionally targeted benefits. In this policy area the European institutions, in particular the Commission, act as benefactor and apparently also intend to increase the public support for European integration. The effects of these targeted transfers on the public support for the EU are studied by combining a rich data set on the regional allocation of structural funds payments with opinion survey data.In the empirical section, it is shown that the regional transfers show a positive impact on the public opinion that turns out to be sizeable. An increase of per capita transfers by 100 Euro increases the probability of being supportive of the EU to the extent of approximately 5 to 15%. Moreover, this is the first paper which is able to analyse the chain of causation which leads from regional transfers to public opinion in a more detailed way. In particular, the relevance of the individual's awareness of being a beneficiary is scrutinized.First, it is found that the awareness of being a beneficiary of transfers is conditional on a number of further socio-economic characteristics. Education plays an important role, since higher educated peoples' awareness reacts stronger to regional transfers than lower educated people. Second, the awareness of being supported is generally reflected in higher public support for the EU. Informed people have a 4% higher probability of having a positive opinion of the EU. However, this effect is also heterogeneous and depends on the channel of information. A sizeable effect is mainly detected for those citizens who are direct recipients of EU funds. Other information sources (TV, information signs) also have a positive but much smaller effect, whereas a negative effect is found in those cases where the respondent is acquainted with other people who...

Mapping citizens' identification with the EU

“…Hence, we need to control for regions' wealth when assessing the role of Cohesion Policy. This is measured by the per capita amount of Structural Fund expenditures in the period 2007–2013 that is mostly allocated to less developed regions and could reinforce the idea of solidarity and care for others within Europe, and the citizen's support to the EU (Capello & Perucca, ; Osterloh, ). However, its effect can be influenced by the local context of implementation of Cohesion Policy at regional level (Capello & Perucca, ).…”

EU Cohesion Policy can't buy me love? Exploring the regional determinants of EU image

“…However, the impact of Cohesion Policy on the citizens' views of the EU remains unclear and contested. Duch and Taylor () argued that regional funding did not translate into increased support for European integration, with the poorer regions receiving more funding staying less “euro‐enthusiastic.” That said, other studies pointed to positive effects of Cohesion Policy spending funds on public support for the EU, however, these were mediated by the degree of awareness of the EU funding, which in turn was related to the level of education (Osterloh, ). Whereas others found no direct link between the size of European Regional Development Fund allocation and EU support, and that the effect of this funding was at best conditional upon pre‐existing views on the EU and education levels (Chalmers & Dellmuth, ).…”

Citizens' perception of the Cohesion Policy and support for the European Union

“…The fact that the distribution of the CP funds among the EU regions for the period 2007–2013 was decided several years before the PERCEIVE survey was carried out and, therefore, well before the perception of the policy and support for the EU were measured, works in favour of the exogeneity of log ( SFpc ) r . For this assumption to hold, it is also crucial that the criteria used to allocate the funds in the different countries and regions were based on objective rules (the relative level of per capita GDP in the region) that did not include the degree of support for the EU of their citizens and/or their perception of the CP (see Osterloh, and Dellmuth & Chalmers, for similar arguments). Likewise, the evidence in Bouvet and Dall'Erba () confirms that Euroscepticism and the citizens' attitudes towards the EU do not exert a significant effect on the distribution of structural funds across countries and regions.…”

“…A mixed‐effect model that accounts for this type of correlation in the errors has been considered in previous studies (e.g., Verhaegen et al, ). Alternatively, the robust region‐clustered standard errors of the estimated coefficients can be computed to account for this correlation, in the context of the bivariate probit model (e.g., Osterloh, ; Serricchio et al, ). In this study we have opted for the latter option.…”