Evaluating the impact of public subsidies on a firm's performance: A quasi-experimental approach
AbstractMany regional governments in developed countries design programs to improve the competitiveness of local firms. In this paper, we evaluate the effectiveness of public programs whose aim is to enhance the performance of firms located in Catalonia (Spain). We compare the performance of publicly subsidised companies (treated) with that of similar, but unsubsidised companies (non-treated). We use the Propensity Score Matching (PSM) methodology to construct a control group which, with respect to its observable characteristics, is as similar as possible to the treated group, and that allows us to identify firms which retain the same propensity to receive public subsidies. Once a valid comparison group has been established, we compare the respective performance of each firm. As a result, we find that recipient firms, on average, change their business practices, improve their performance, and increase their value added as a direct result of public subsidy programs.
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Bibliographic InfoPaper provided by Institut d'Economia de Barcelona (IEB) in its series Working Papers with number 2007/3.
Length: 34 pages
Date of creation: 2007
Date of revision:
Evaluation studies; Firm performance; Propensity Score Matching; Public policy;
Other versions of this item:
- Néstor Duch & Daniel Montolio & Mauro Mediavilla, 2007. "Evaluating the impact of public subsidies on a firm's performance: A quasi-experimental approach," Working Papers XREAP2007-07, Xarxa de Referència en Economia Aplicada (XREAP), revised Jul 2007.
- Nestor Duch Brown & Daniel Montolio Estivill & Mauro Mediavilla, 2007. "Evaluating the Impact of Public Subsidies on a Firms Performance: a Quasi-experimental Approach," Working Papers in Economics 181, Universitat de Barcelona. Espai de Recerca en Economia.
- H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
- H32 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Firm
- L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
- L53 - Industrial Organization - - Regulation and Industrial Policy - - - Enterprise Policy
This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-11-17 (All new papers)
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