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Public subsidies, TFP and efficiency: A tale of complex relationships

Cristina Bernini, Augusto Cerqua () and Guido Pellegrini ()

Research Policy, 2017, vol. 46, issue 4, 751-767

Abstract: This paper evaluates the impact of subsidies on the different components of TFP for granted firms’ long-term growth. The impact of capital subsidies is captured by a quasi–experimental method (Multiple RDD), exploiting the conditions for a local random experiment created by an Italian industrial policy. Results show that capital subsidies negatively affect TFP growth in the short term, and signals of positive effects appear only after 3–4 years. This positive medium-long term impact comes especially through technological change and not through scale impact change, as may have been expected.

Keywords: Policy evaluation; Public subsidies; TFP decomposition; Stochastic frontier model; Regression discontinuity design (search for similar items in EconPapers)
JEL-codes: H71 R38 C14 (search for similar items in EconPapers)
Date: 2017
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Related works:
Working Paper: Public subsidies, TFP and efficiency: a tale of complex relationships (2015) Downloads
Working Paper: Public subsidies, TFP and Efficiency: a tale of complex relationships (2015) Downloads
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