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Are the subsidies to private capital useful? A Multiple Regression Discontinuity Design Approach1

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  • Guido Pellegrini
  • Augusto Cerqua

    ()

Abstract

There is still little consensus on the effectiveness of business support policies. The empirical evaluation is complicated by the difficulty in achieving reliable identification. We analyse the impact of Law 488/92, the main Italian regional policy. We propose a new approach, named multiple regression discontinuity design that exploits the sharp discontinuities in the L488 rankings and extends the RDD approach to a context where the treatment is assigned by multiple rankings with different cut-off points. We find that the impact of L488 on investment and production of the financed firms is positive and statistically significant.

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File URL: http://www-sre.wu.ac.at/ersa/ersaconfs/ersa11/e110830aFinal01323.pdf
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Bibliographic Info

Paper provided by European Regional Science Association in its series ERSA conference papers with number ersa11p1323.

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Date of creation: Sep 2011
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Handle: RePEc:wiw:wiwrsa:ersa11p1323

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  1. Richard Harris & Mary Trainor, 2005. "Capital Subsidies and their Impact on Total Factor Productivity: Firm-Level Evidence from Northern Ireland," Journal of Regional Science, Wiley Blackwell, vol. 45(1), pages 49-74.
  2. Sascha O. Becker & Andrea Ichino, 2002. "Estimation of average treatment effects based on propensity scores," Stata Journal, StataCorp LP, vol. 2(4), pages 358-377, November.
  3. Guido PELLEGRINI & Carla CARLUCCI, 2003. "Gli effetti della legge 488/92: una valutazione dell'impatto occupazionale sulle imprese agevolate," Rivista Italiana degli Economisti, SIE - Societa' Italiana degli Economisti (I), vol. 8(2), pages 267-296, August.
  4. Guido Imbens & Karthik Kalyanaraman, 2012. "Optimal Bandwidth Choice for the Regression Discontinuity Estimator," Review of Economic Studies, Oxford University Press, vol. 79(3), pages 933-959.
  5. Bondonio, Daniele, 2009. "Impact identification strategies for evaluating business incentive programs," POLIS Working Papers 129, Institute of Public Policy and Public Choice - POLIS.
  6. McCrary, Justin, 2008. "Manipulation of the running variable in the regression discontinuity design: A density test," Journal of Econometrics, Elsevier, vol. 142(2), pages 698-714, February.
  7. Chiara Criscuolo & Ralf Martin & Henry G. Overman & John Van Reenen, 2012. "The Causal Effects of an Industrial Policy," SERC Discussion Papers 0098, Spatial Economics Research Centre, LSE.
  8. Raffaello Bronzini & Guido De Blasio, 2005. "Evaluating the impact of investment incentives - the case of the Italian Law 488," ERSA conference papers ersa05p649, European Regional Science Association.
  9. Imbens, Guido & Wooldridge, Jeffrey M., 2009. "Recent Developments in the Econometrics of Program Evaluation," Scholarly Articles 3043416, Harvard University Department of Economics.
  10. Todd M. Gabe & David S. Kraybill, 2002. "The Effect of State Economic Development Incentives on Employment Growth of Establishments," Journal of Regional Science, Wiley Blackwell, vol. 42(4), pages 703-730.
  11. Valentina Adorno & Cristina Bernini & Guido Pellegrini, 2007. "The Impact of Capital Subsidies: New Estimations under Continuous Treatment," Giornale degli Economisti, GDE (Giornale degli Economisti e Annali di Economia), Bocconi University, vol. 66(1), pages 67-92, March.
  12. Austin Nichols, 2009. "Causal inference," DC09 Stata Conference 8, Stata Users Group.
  13. Lee, David S., 2008. "Randomized experiments from non-random selection in U.S. House elections," Journal of Econometrics, Elsevier, vol. 142(2), pages 675-697, February.
  14. Battistin, Erich & Rettore, Enrico, 2008. "Ineligibles and eligible non-participants as a double comparison group in regression-discontinuity designs," Journal of Econometrics, Elsevier, vol. 142(2), pages 715-730, February.
  15. Bernini, Cristina & Pellegrini, Guido, 2011. "How are growth and productivity in private firms affected by public subsidy? Evidence from a regional policy," Regional Science and Urban Economics, Elsevier, vol. 41(3), pages 253-265, May.
  16. Busillo & Teo Muccigrosso & Guido Pellegrini & Ornella Tarola & Terribile, 2010. "Measuring the Impact of the European Regional Policy on Economic Growth: a Regression Discontinuity Design Approach," Working Papers 6/10, Sapienza University of Rome, DISS.
  17. Marusca de Castris & Guido Pellegrini, 2012. "Evaluation of Spatial Effects of Capital Subsidies in the South of Italy," Regional Studies, Taylor & Francis Journals, vol. 46(4), pages 525-538, June.
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