Place-Based Industrial Policy in the Energy Transition: An Empirical Study on the Economic and Political Effects of the Just Transition Fund

Abstract

This study investigates the economic and political impacts of the European Commission's Just Transition Fund (JTF), a policy designed to mitigate regressive distributional effects of climate policies and address spatial economic inequality. Given the urgent need for ambitious climate policies and potentially weakening public support in the EU, the JTF aims to improve economic conditions and prevent unemployment in disadvantaged regions. This research offers empirical quantitative insights into the economic and political effects of place-based just transition policies, an area where research is limited. This research addresses two questions: How does the JTF influence GDP per capita and unemployment rates in regions with an approved Territorial Just Transition Plan? And how does it affect green voting in these regions? Employing a difference-in-differences design, the study utilizes Eurostat data for the economic analysis across the EU (2014-2023) and German federal election data for the political analysis (2005-2025). The empirical results indicate no statistically significant effects of the JTF on either economic indicators (GDP per capita and unemployment rates) or political outcomes (share of green votes). However, the full effects of the JTF may not yet be visible, as the fund only became active in 2021 and its investments are allocated until 2027.