Working Paper: CEPR ID: DP15078
Authors: Nauro Campos; Fabrizio Coricelli; Luigi Moretti
Abstract: This paper studies the effects on productivity of integration deepening. Our identification strategy uses the 1995 European Union (EU) enlargement when all four candidate countries joined the European Economic Area (economic integration) but only one (Norway) chose not to join the EU (institutional integration). Using synthetic control methods on sectoral and regional data, we find that had Norway chosen institutional instead of only economic integration in 1995, the average Norwegian region would have experienced a yearly average productivity growth increase of about half a percentage point. We also find these losses are larger for industry than for other sectors.
Keywords: institutional integration; economic integration; productivity growth; European Union; European Economic Area; synthetic control method
JEL Codes: C33; F15; F55; O43; O52
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| presence of oil and gas sector in Norway (L71) | potential confounding factor affecting productivity (J29) |
| previous research indicates Norway has not suffered from 'Dutch disease' (Q33) | supports identification strategy (L10) |
| control for natural resources sector and political motivations (L78) | isolates influences on productivity (O49) |
| Norway's decision not to join the EU in 1995 (F55) | productivity growth increase in average Norwegian region (O49) |
| institutional integration (F55) | productivity growth increase in average Norwegian region (O49) |
| Norwegian regions economically integrated through EEA but not institutionally integrated (F15) | difference in productivity compared to Austria, Finland, and Sweden (O49) |
| productivity growth from institutional integration (O43) | larger for the industrial sector compared to other sectors (L69) |