The Effect of EU Funds on Labor Demand: the case of Italian Provinces

This article examines how EU structural funds affect local labor demand. Using Lightcast granular data on online-job postings in Italy, we match quarterly information on EU project disbursements with variations in labor demand at NUTS3 provincial level. By relying on a shift-share type of instrument, we find that EU structural funds have a positive effect on the number of job postings. The resulting impact is mostly driven by the European Social Fund (ESF) and is particularly strong on jobs that require green and digital skills. Moreover, the results suggest that the effect on labor demand manifests itself only in areas with middle-high socioeconomic conditions, while it is not significant in poorest areas. From a policy perspective, our findings point to a negative role played by EU structural funds in reducing geographical disparities in terms of employment opportunities across Italian provinces.