Economic policy evaluation: environment and refugee centers

Caruso, Matteo and Slechten, Aurelie and Chakraborty, Pavel (2024) Economic policy evaluation: environment and refugee centers. PhD thesis, Lancaster University.

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Abstract

In a world that is growing faster and unexpectedly, the role of national and local governments in addressing social issues becomes much more relevant. Thanks to the availability of more advanced and detailed data, economists are nowadays more able to analyse and assess the outcomes of specific policies, both on firms and individuals. Through the use of new and mainstream advanced econometric methods, it is possible to dig deeper into unexplored issues and provide guidance for the improvement and implementation of those policies. This work aims to address two economically and socially relevant topics: the protection of the environment in the United States and the management of the refugee crisis in Italy. In the first chapter, I explore the effects on high-skilled labour of a change in emission standards for cars sold in the United States. Corporate Average Fuel Economy (CAFE) standards establish the average level of miles per gallon (mpg) for each automaker’s fleet of vehicles sold on the market. They have been in place since the 1970s but they have remained stable for many years. In 2010, the Obama Administration announced a new relevant variation of those standards for new models starting in 2012. Previous literature has explored the impact of those and similar regulations on firms’ innovation and productivity. In these works, the main outcome variables are often patents or R&D expenditure. I add to this strand of research by analysing the impact of these standards on suppliers’ labour force. Since innovation requires a relevant amount of human capital, I look at technical personnel such as engineers and scientists to explore how the industry changed its workforce composition to implement research and development investments and meet the new criteria. I show how the industry supplying internal combustion engines (ICE) displayed a significant increase in the number of mechanical engineers compared to other control units. The main tasks of mechanical engineers are strictly related to the design and development of new ICEs. On the other hand, the same analysis does not show a similar effect for the industry supplying electric vehicle engines (EVE). These conclusions provide evidence of how the industry responded to the new regulation through an incremental innovation rather than a radical one. These results are corroborated by the low number of new pure EVs sold in the United States compared to standard petrol-based or hybrid models. My analysis provides new evidence of the impact that these new standards had not only on automotive innovation but also on the composition of its workforce. For my second chapter, I study the impact of refugee centres in Italy on municipalities’ public spending. Since the beginning of the century, the problem of refugees fleeing from wars and persecution has been particularly relevant to Italy given its strategic position in the Mediterranean Sea. Both local and central governments have tried to address this issue through different types of projects to host and manage this relevant inflow. Many projects were initially informal and managed by the single Italian municipalities, until the central government decided in 2005 to institutionalise them with the Protection of Asylum Seekers and Refugee System (SPRAR). Through this system, municipalities could decide to host a refugee centre with the financial help of the Ministry of the Interior, financing up to 80% of the cost. SPRAR centres are small in size and provide language courses, job orientation, and legal advice to the hosted refugees. They are managed by local non-governmental organisations (NGOs) and are supervised by the municipality itself. The Arab Spring crisis in 2011 exacerbated the refugee crisis and forced the central government in 2014 to set up many new Extraordinary Emergency Centres (CAS). These centres are instead assigned by the government directly to private actors or NGOs and they do not involve the municipality’s participation. Municipalities have no saying on where the prefecture (local representation of the central government) decides to establish the centre. CAS centres are not required to provide any type of course or formation for the refugee. Using municipality’s balance sheets, I study the impact that these two type of centres have on municipalities’ current spending. I restrict the analysis to municipalities with less than 5000 residents. Municipalities with SPRAR centres show an increase in social spending due to the presence of the centre and other activities related to culture. Even when controlling for revenues from the central government, this increase is statistically significant. This may suggest that the spending for the SPRAR centre has a non-negligible impact on municipalities’ own financial resources. Most of this spending comes in the form of transfers to families, firms, and local associations. This hypothesis is supported by the increase in foreign population (especially from North Africa) for municipalities with SPRAR. This is mainly due to SPRAR projects requiring refugees to set up their residency into the municipality. There is no similar increase for municipalities’ with CAS centres, where refugees are not required to acquire any residency status. These results shed some light over the actual impact that refugee centres have on local finances and communities. For the third chapter, I extend the previous analysis on refugee centres analysing what impact they might have on local politics. More precisely, in a this joint work with Dr. Giuseppe Migali, I study whether the opening of the refugee centre affects the current mayor’s chances of winning a second term. Focusing on two types of centers—the System for the Protection of Asylum Seekers and Refugees (SAI) and the Extraordinary Reception Centers (CAS)— we analyse how these facilities impact voter behavior, especially in light of the integration services provided by SAI centers and the more temporary role of CAS centers. The main results suggest that SAI centers, which promote integration, are positively associated with mayors’ reelection prospects in regions with high social capital, particularly in Northern Italy. CAS centers, in contrast, are found to have minimal impact on re-election chances, except in certain areas where they may slightly increase support for right-wing parties. We also provide evidence of possible bias in the location of this second type of centres due to political strategic behaviour of central governments.