The European single market and intra-EU trade: an assessment with heterogeneity-robust difference-in-differences methods

Abstract

We use heterogeneity-robust difference-in-differences (DiD) methods to evaluate the impact of membership in the European Union (EU) single market on international trade. On the policy front, we provide evidence that: (i) on average, the EU has been very effective in promoting trade among its member states; (ii) the trade effects of the EU have been long-lasting, but heterogeneous across EU cohorts; and (iii) while the EU has benefited both ‘old’ and ‘new’ members, the increase in the exports from the ‘old’ members to the ‘new’ joiners has been disproportionately larger. From a methods and practical perspective, the contribution of this paper is to introduce a new, fast and flexible estimation command that combines leading estimation techniques from the gravity literature with recent methods from the heterogeneity-robust DiD literature.