How are growth and productivity in private firms affected by public subsidy? Evidence from a regional policy

Cristina Bernini () and Guido Pellegrini

Regional Science and Urban Economics, 2011, vol. 41, issue 3, 253-265

Abstract: The paper provides a statistically robust evaluation of the impact of state aid on capital accumulation in subsidized firms. The analysis considers subsidies allocated to the southern Italian regions over the period 1996-2004 under the regional policy, Law 488/1992. We apply an MDID estimator, taking selection on observables and non observables into account. Results evidence a higher growth in output, employment and fixed assets in subsidized firms but a lesser increase in Total Factor Productivity than in unsubsidized firms. The negative impact on long term productivity and growth reduces the positive temporary effects of regional subsidies.

Keywords: Public; subsidies; Policy; evaluation; Regional; policy; MDID; estimator (search for similar items in EconPapers)
Date: 2011
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Citations: View citations in EconPapers (147)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:regeco:v:41:y:2011:i:3:p:253-265

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