Seminar

The EU Miracle: When 75 Million Reach High Income

Basile Grassi (Bocconi University)

  • Date13 October 2026
  • Time 14h00 - 15h30
  • Room Auditorium 4

Abstract

In 2004, 75 million people across ten countries joined the European Union (EU). Between 2004 and 2019, their GDP per capita doubled. Empirically, I show the new members’ GDP per capita was 32% higher in 2019 thanks to EU accession. I do not find a significant effect on the pre-2004 members. These findings are robust to a wide range of tests. Standard growth accounting indicates that the Solow residual was the primary driver of growth. I interpret these results through a neoclassical growth model with heterogeneous firms facing idiosyncratic distortions. I quantify changes in the joint distribution of productivities and wedges. This wedge accounting exercise implies modest changes in allocative efficiency and substantial improvements in firm-level productivity, consistent with EU accession shifting the technology frontier. These results indicate that, to account for this economic miracle, allowing for technological change is fundamental.

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