Evaluating the Impact of Public Subsidies on a Firms Performance: a Quasi-experimental Approach

Néstor Duch Brown, Daniel Montolio and Mauro Mediavilla
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Mauro Mediavilla: Universitat de Barcelona

No 181, Working Papers in Economics from Universitat de Barcelona. Espai de Recerca en Economia

Abstract: Many 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.

JEL-codes: H25 H32 L25 L53 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2007
New Economics Papers: this item is included in nep-eff and nep-pbe
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

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Working Paper: Evaluating the impact of public subsidies on a firm's performance: A quasi-experimental approach (2007)
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