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Are Incentives For R&D Effective? Evidence From A Regression Discontinuity Approach

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  • Raffaello Bronzini

    ()

  • Eleonora Iachini

Abstract

This paper contributes to the literature on the effectiveness of R&D incentives by evaluating a unique investment subsidy program implemented in northern Italy. Firms were invited to submit proposals for new projects and only those that scored above a certain threshold received the subsidy. We use a sharp regression discontinuity design to compare investment spending of subsidized firms just above the cut-off score with spending by firms just below the cut-off. For the sample as a whole we find no significant increase in investment as a result of the program. This overall effect, however, masks substantial heterogeneity in the program’s impact. On average, we estimate that small enterprises increased their investments by about the amount of the subsidy they received from the program, whereas for larger firms the subsidies appear to have had no additional effect.

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Paper provided by European Regional Science Association in its series ERSA conference papers with number ersa12p848.

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Date of creation: Oct 2012
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Handle: RePEc:wiw:wiwrsa:ersa12p848

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Cited by:
  1. Gustavo A. Crespi & Alessandro Maffioli & Pierre Mohnen & Gonzalo Vázquez, 2011. "Evaluating the Impact of Science, Technology and Innovation Programs: a Methodological Toolkit," SPD Working Papers, Inter-American Development Bank, Office of Strategic Planning and Development Effectiveness (SPD) 1104, Inter-American Development Bank, Office of Strategic Planning and Development Effectiveness (SPD).
  2. Hijzen, Alexander & Mondauto, Leopoldo & Scarpetta, Stefano, 2013. "The Perverse Effects of Job-Security Provisions on Job Security in Italy: Results from a Regression Discontinuity Design," IZA Discussion Papers 7594, Institute for the Study of Labor (IZA).
  3. Morten S. Henningsen & Torbjørn Hægeland & Jarle Møen, 2012. "Estimating the additionality of R&D subsidies using proposal evaluation data to control for firms’ R&D intentions," Discussion Papers, Research Department of Statistics Norway 729, Research Department of Statistics Norway.
  4. Raffaello Bronzini & Paolo Piselli, 2014. "The impact of R&D subsidies on firm innovation," Temi di discussione (Economic working papers), Bank of Italy, Economic Research and International Relations Area 960, Bank of Italy, Economic Research and International Relations Area.
  5. 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, Verein für Socialpolitik / German Economic Association 79843, Verein für Socialpolitik / German Economic Association.
  6. Marco Corsino & Roberto Gabriele & Anna Giunta, 2012. "R&D Incentives: The Effectiveness Of A Place-Based Policy," Departmental Working Papers of Economics - University 'Roma Tre', Department of Economics - University Roma Tre 0169, Department of Economics - University Roma Tre.
  7. Chiara Criscuolo & Ralf Martin & Henry G. Overman & John Van Reenen, 2012. "The Causal Effects of an Industrial Policy," SERC Discussion Papers, Spatial Economics Research Centre, LSE 0098, Spatial Economics Research Centre, LSE.
  8. Henningsen, Morten S. & Hægeland, Torbjørn & Møen, Jarle, 2014. "Estimating the additionality of R&D subsidies using proposal evaluation data to control for research intentions," Discussion Papers, Department of Business and Management Science, Norwegian School of Economics 2014/18, Department of Business and Management Science, Norwegian School of Economics.
  9. Leandro D’Aurizio & Marco Marinucci, 2013. "Italian firms’ innovation strategies in 2008-2010," Questioni di Economia e Finanza (Occasional Papers), Bank of Italy, Economic Research and International Relations Area 197, Bank of Italy, Economic Research and International Relations Area.

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