EU Project Participation and Employment Dynamics among E-commerce Firms in Bulgaria

This research aims to assess whether participation of Bulgarian e-commerce companies in their first European Union funded projects has had any impact on employment patterns among these companies. Data was obtained via three different data sources: the National Revenue Agency; the Unified Information Platform for European Funds; and the Lakorda platform, all of which provided data on the number of e-commerce registrations, the number of European projects participated in and the number of employees each company employed annually.

The empirical methodology used in this study was a combination of comparative methodologies, including the use of descriptive statistics, and the use of a staggered Difference-in-Differences model, as well as an event study methodology to compare the levels of employment of companies prior to and subsequent to their first participation in the projects. The results indicate that companies which participate in EU-funded projects have a much larger proportion of formalized activity, such as a higher rate of VAT registration compared to those companies that do not participate in European-funded projects. However, the results show no difference in terms of the geographical distribution of the companies or in terms of the organizational structure of the companies.

However, neither the Difference-in-Differences estimates nor the results of the event study demonstrate any statistically significant increase in employment due to European project participation in the short to medium term. Overall, the results of this study emphasize the need to distinguish between formalization, employment stability and job creation when assessing the impact of European funding at the company level. Additionally, the study provides new evidence using administrative data regarding the labor market effects of European -funded programs on e-commerce companies in Bulgaria.