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Intended and unintended effects of public incentives for innovation. Quasi-experimental evidence from Italy

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  • Giovanni Mellace
  • Marco Ventura

Abstract

Italy introduced a policy to incentivize young innovative start-up firms in 2012. Using a regression discontinuity design (RDD) we estimate its causal effects on the firms' share of intangible assets, turnover, number of employees, and number of partners. Our results indicate that after two years the policy was effective in increasing the number of partners, but we do not find any significant effects on innovation, at least in the short run. We provide strong evidence that the new investors might have been attracted by the tax benefit but had little interest in innovation.

Suggested Citation

  • Giovanni Mellace & Marco Ventura, 2021. "Intended and unintended effects of public incentives for innovation. Quasi-experimental evidence from Italy," Working Papers in Public Economics 199, University of Rome La Sapienza, Department of Economics and Law.
  • Handle: RePEc:sap:wpaper:wp199
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    More about this item

    Keywords

    Policy evaluation; Regression discontinuity design; Incentives to innovations;
    All these keywords.

    JEL classification:

    • H32 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Firm
    • L52 - Industrial Organization - - Regulation and Industrial Policy - - - Industrial Policy; Sectoral Planning Methods
    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives

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