Spatial disparities in income levels and worklessness in the European Union are profound, persistent and may be widening. We describe disparities across metropolitan regions and discuss theories and empirical evidence that help us understand what causes these disparities. Increases in the productivity benefits of cities, the clustering of highly educated workers and increases in their wage premium all play a role. Europe has a long-standing tradition of using capital subsidies, enterprise zones, transport investments and other place-based policies to address these disparities. The evidence suggests these policies may have partially offset increasing disparities but are not sufficient to fully offset the economic forces at work.

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Maximilian v. Ehrlich and Henry G. Overman

12 October 2020     Paper Number CEPDP1726

Download PDF - Place-based policies and spatial disparities across European cities

This CEP discussion paper is published under the centre's Urban programme.