Recent election results have demonstrated that political discontent in many countries is regionally concentrated. Research analyzing these electoral outcomes has identified a “geography of discontent” in which populist voting clusters in economically left-behind places. To counter regionally concentrated political frustration, place-based economic policies targeting disadvantaged regions have become increasingly popular among policymakers.
In this paper, we assess the effectiveness of place-based policies in countering political frustration and populism with a focus on their distributional effects within regions. Building on political economy research on place-based spending, we hypothesize that such policies are unlikely to benefit the most disadvantaged citizens within targeted regions. Instead, we expect place-based funding to be skill-biased, benefitting primarily well-educated voters with lower levels of political discontent.
Empirically, we study the EU’s Cohesion Policy using a natural experiment and randomized survey experiments. For the natural experiment, we construct a new large panel dataset at the subnational level from Eurobarometer waves in 1980-2020 and leverage a discontinuity in regional funding eligibility in an RD design. In the randomized experiments that are embedded in a two-wave survey (N=2,046), we expose respondents to information treatments and encourage one half of them to pay attention to EU-funded projects in their home region between the two waves. In both analyses, we find strong evidence that place-based policies reduce political discontent only among the highly skilled and the rich. Political attitudes of other groups are not affected, suggesting that the effectiveness of place-based policies in addressing political discontent is limited by their distributional effects.