Cohesion Policy Funds and local government autonomy: Evidence from Italian municipalities

In this article we investigate the effect of the European Union (EU) Cohesion Policy funds dedicated to administrative capacity building on the local government autonomy for the Italian case focusing on municipalities taking part to the programming cycle 2007-13. From an empirical perspective, the causal impact is estimated using a Difference-in-Differences (DiD) design with continuous treatment combined with a Propensity Score Matching approach. We exploit a unique database developed by the open government initiative on cohesion policies in Italy (OpenCoesione), which collects detailed information at municipality level on financed EU projects. Our results show that the specific Cohesion Policy funds have a positive and significant effect on the local government autonomy measured in terms of taxation autonomy.