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How are growth and productivity in private firms affected by public subsidy? Evidence from a regional policy

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  • Bernini, Cristina
  • Pellegrini, Guido

Abstract

The paper provides a statistically robust evaluation of the impact of state aid on capital accumulation in subsidized firms. The analysis considers subsidies allocated to the southern Italian regions over the period 1996-2004 under the regional policy, Law 488/1992. We apply an MDID estimator, taking selection on observables and non observables into account. Results evidence a higher growth in output, employment and fixed assets in subsidized firms but a lesser increase in Total Factor Productivity than in unsubsidized firms. The negative impact on long term productivity and growth reduces the positive temporary effects of regional subsidies.

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Bibliographic Info

Article provided by Elsevier in its journal Regional Science and Urban Economics.

Volume (Year): 41 (2011)
Issue (Month): 3 (May)
Pages: 253-265

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Handle: RePEc:eee:regeco:v:41:y:2011:i:3:p:253-265

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Web page: http://www.elsevier.com/locate/regec

Related research

Keywords: Public subsidies Policy evaluation Regional policy MDID estimator;

References

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Citations

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Cited by:
  1. Andries Brandsma & Pavel Ciaian & d'Artis Kancs, 2013. "The Role of Additionality in the EU Cohesion Policies," JRC-IPTS Working Papers JRC81893, Institute for Prospective and Technological Studies, Joint Research Centre.
  2. Berumen, Sergio A., 2012. "Evaluación del impacto de la política de incentivos sectoriales en el desarrollo de los municipios mineros de Castilla y León," Journal of Economics, Finance and Administrative Science, Universidad ESAN, vol. 17(33), pages 15-30.
  3. Guglielmo Barone & Gaia Narciso, 2013. "The effect of organized crime on public funds," Temi di discussione (Economic working papers) 916, Bank of Italy, Economic Research and International Relations Area.
  4. Michalek, Jerzy & Ciaian, Pavel & Kancs, d'Artis, 2013. "Firm-Level Evidence Of Deadweight Loss Of Investment Support Policies: A Case Study Of Dairy Farms In Schleswig-Holstein," Proceedings Issues, 2013: Productivity and Its Impacts on Global Trade, June 2-4, 2013. Seville, Spain 152257, International Agricultural Trade Research Consortium.
  5. Pauline Givord & Roland Rathelot & Patrick Sillard, 2011. "Place-based Tax Exemptions and Displacement Effects : An Evaluation of the Zones Franches Urbaines Program," Working Papers 2011-19, Centre de Recherche en Economie et Statistique.
  6. Augusto Cerqua & Guido Pellegrini, 2014. "Beyond the SUTVA: how policy evaluations change when we allow for interactions among firms," Working Papers 2/14, Sapienza University of Rome, DISS.
  7. Kölling, Arnd, 2013. "Wirtschaftsförderung, Produktivität und betriebliche Arbeitsnachfrage - Eine Kausalanalyse mit Betriebspaneldaten -," Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79843, Verein für Socialpolitik / German Economic Association.
  8. Petraglia Carmelo, 2011. "Il Mezzogiorno nella letteratura economica del 2011," Rivista economica del Mezzogiorno, Società editrice il Mulino, issue 4, pages 1083-1098.
  9. Augusto Cerqua & Guido Pellegrini, 2013. "Beyond the SUTVA: how industrial policy evaluations change when we allow for interaction among firms," ERSA conference papers ersa13p340, European Regional Science Association.
  10. Alessandro Cusimano & Fabio Mazzola, 2013. "Ex-post evaluation of Territorial Integrated Projects in Italy: an empirical analysis at firm level," ERSA conference papers ersa13p1331, European Regional Science Association.
  11. Guglielmo Barone & Gaia Narciso, 2012. "The Effect Of Mafia On Public Transfers," The Institute for International Integration Studies Discussion Paper Series iiisdp398, IIIS.
  12. David Neumark & Helen Simpson, 2014. "Place-Based Policies," NBER Working Papers 20049, National Bureau of Economic Research, Inc.
  13. Toshihiro Okubo & Eiichi Tomiura, 2011. "Industrial relocation policy, productivity and heterogeneous plants: Evidence from Japan," Keio/Kyoto Joint Global COE Discussion Paper Series 2011-011, Keio/Kyoto Joint Global COE Program.
  14. Guido Pellegrini & Augusto Cerqua, 2011. "Are the subsidies to private capital useful? A Multiple Regression Discontinuity Design Approach1," ERSA conference papers ersa11p1323, European Regional Science Association.

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