Stefan Apostol (p), Eduardo Hernández-Rodríguez

Andrea Caragliu

Digitalisation has become a clear policy objective. Regions want to digitalise their economies to benefit from the digital world. This paper provides empirical evidence on how the adoption of new digital web technologies is shaped by the previous digital capabilities of regions. The analysis is based upon an economic complexity and relatedness framework using data on digital web technologies’ use for 278 European NUTS-2 regions between the years 2000-2022. The results show that regions tend to adopt new digital web technologies when they already master related digital capabilities. This paper also shows how digital complexity is associated with productivity gains at a regional level.

Gian Maria Mallarino (p), Ireri Hernanded

Marco di Cataldo

Environmental policies such as the European Union Emissions Trading System (EU ETS) raise concerns about their impact on employment and competitiveness. Yet, exist- ing EU ETS studies focus on firm-level outcomes and the initial phases of the program. We construct a panel dataset of about 15,000 European NUTS3 level provinces between 2005 and 2019 to assess the impact of the EU ETS, and in particular on its Phase III, on the local economic performance, namely gross value added (GVA), employment, and productivity per employee (PPE) of European provinces. We employ data on emissions covered by the EU ETS to construct a continuous measure of local level exposure. Using a continuous difference-in-differences fixed effects framework, we find that that being more exposed to the EU ETS is associated with negative and significant results on employment and significant increases in productivity, starting from Phase II. These results are confirmed both at the sector and general NUTS3 level, suggesting that local economies have generally been able to increase their productivity as an answer to the constraints posed by the EU ETS system.

Murray Fallk (p), Davide Luca

Daria Denti

Energy extraction is often touted as an antidote to rural decay in amenity-rich areas. However, to what extent does energy development truly benefit rural communities? In 2008, shale gas extraction through “fracking” began to dominate the landscape of rural Pennsylvania, with policymakers highlighting its positive socioeconomic effects for local communities. Despite sharing vast natural gas deposits, neighboring New York implemented a moratorium on fracking in 2008 and officially banned the practice in 2014. Using New York and Pennsylvania’s differential approaches, this paper employs a synthetic control method to study fracking’s local impact on population and socio-economic changes. While the analysis reveals a statistically significant population response to fracking with county-specific heterogeneity, the results underscore how fracking failed to translate into the touted demographic and economic boost for rural Pennsylvania. Thus, this analysis concludes that despite politicians’, government agencies’, and industry insiders’ ambitious promises, in the context of population growth and socio-political advancement, the 2008 fracking boom was a bust.

Overall, this research makes several contributions to the regional economics literature. First, this paper employs a novel approach to estimating population change from the fracking boom—the synthetic control method—with a unique focus on the individual-county level. The synthetic control model wields several empirical advantages over other relevant tools common in the literature, such as difference-in-differences. Second, of the limited literature specifically focusing on the socio-demographic consequences of fracking, many are conducted in, or use data from, the early years of the fracking boom—limiting concerned audiences’ and stakeholders’ (e.g., local governments) abilities to understand the long-term implications of natural gas extraction. Lastly, this research goes a step beyond traditional analyses by complimenting the quantitative components with an examination of the socio-political implications of shifting populations, such as Congressional representation and government funding—both of which are critical to the survival of weakened rural communities. Ultimately, this analysis will facilitate an improved understanding of fracking and its significance for rural communities in the United States.