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Regional grants: are they worth It?

Lookup NU author(s): Professor Colin Wren

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Abstract

Regional grants have recently come under scrutiny and are controversial. Some estimates put the employment effect of these grants at no more than 6,000 jobs in the first half of the 1990s, against expenditure of £500 million. Other aspects of the grants are questioned, such as their ability to attract foreign direct investment and their effect on productivity. This paper reviews these issues, focusing on the recent evidence for the Regional Selective Assistance scheme. It describes the nature and difficulties involved in policy evaluation, and finds that differences over the employment effect of the grants result from possible biases induced by the evaluation methodology and from differences in the job measure used. Overall, the paper argues that the regional grants are cost-effective in employment terms, but that expenditure is small relative to the scale of the problem, so that an expansion of the grants may be desirable.

Publication metadata

Author(s): Wren CM

Publication type: Article

Publication status: Published

Journal: Fiscal Studies

Year: 2005

Volume: 26

Issue: 2

Pages: 245-275

Print publication date: 01/06/2005

Date deposited: 11/12/2007

ISSN (print): 0143-5671

ISSN (electronic): 1475-5890

Publisher: Wiley-Blackwell Publishing, Inc.

URL: http://dx.doi.org/10.1111/j.1475-5890.2005.00012.x

DOI: 10.1111/j.1475-5890.2005.00012.x

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