Abstract

The paper examines the experience of fiscal restrictions after the financial crisis in the EU. It demonstrates a possibly strong relationship between austerity measures and economic performance at the regional level. The results further show that higher shares of the population with at least an upper secondary education, higher shares of employment in industry, and lower shares of employment in trade were associated with fewer negative impacts of the consolidation packages. It also shows that regions with relatively worse starting positions were likely to be hit more severely by the consolidation measures.