Institutional Integration and Economic Growth in Europe

Abstract

The literature on the growth effects of European integration remains inconclusive. This is due to 9 severe methodological difficulties mostly driven by country heterogeneity. This paper addresses 10 these concerns using the synthetic control method. It constructs counterfactuals for countries that 11 joined the European Union (EU) from 1973 to 2004. We find that growth effects from EU 12 membership are large and positive, with Greece as the exception. Despite substantial variation 13 across countries and over time, we estimate that without European integration, per capita 14 incomes would have been, on average, approximately 10 percent lower in the first ten years after 15 joining the EU.