Cohesion Policy and Income Inequality: Evidence from Italian Municipalities (2000–2022)

This paper investigates the effects of EU Cohesion Policy on income growth and inequality across municipalities in Italian Objective 1 regions. Using a difference-in-differences approach and detailed panel data from 2000 to 2022, we assess how staggered disbursement of EU funds affects per-capita income growth and income distribution. Although we find a significant and persistent positive effect of EU funds on income growth starting from 5 years after the first payment, the inequality – measured by Gini and Atkinson indices – tends to increase. This suggests that EU cohesion funds, even if effective in promoting income growth, do not necessarily contribute to greater equity.