Unpacking Endogeneity: Growth, Discontent and Cohesion Policy in the EU Regions

ABSTRACT This paper explores the complex interplay between regional economic growth, political discontent, and policy responsiveness within EU regions, focusing on increasing inequalities in the context of the EU's ongoing processes of deepening and widening integration. Drawing on panel data for the EU28 at the regional level (NUTS2) from 2010 to 2018, these interconnected dimensions are treated as endogenous within a Three‐Stage Least Squares estimation framework, aiming to uncover both direct and indirect effects. Our findings reveal the existence of feedback loops that link regional economic trajectories, rising public discontent, and the responsiveness (or lack thereof) of EU Cohesion Policy and underscore the necessity of a holistic and systemic approach to policy design.