The EU Miracle: When 75 Million Reach High Income

In 2004, 75 million people across 10 countries joined the European Union (EU). In the subsequent 15 years, their GDP per capita doubled. Synthetic control methods show the new members’ GDP per capita was 32% higher in 2019 thanks to the EU adhesion. I do not find a significant effect on the pre-2004 members. These findings are robust to various tests. Growth was primarily driven by the Solow residual. Data show rapid convergence in the main aggregates and declining misallocation measures, whereas TFP has not fully converged. These results point toward a large positive impact of the EU.