Are Incentives for R&D Effective? Evidence from a Regression Discontinuity Approach
- (pp. 100-134)
Abstract
This paper evaluates a unique R&D subsidy program implemented in northern Italy. Firms were invited to submit proposals for new projects and only those which scored above a certain threshold received the subsidy. We use a sharp regression discontinuity design to compare the investment spending of subsidized firms with that of unsubsidized firms. For the sample as a whole we find no significant increase in investment. This overall effect, however, masks substantial heterogeneity in the program's impact. We estimate that small enterprises increased their investments- by approximately the amount of the subsidy they received- whereas larger firms did not.Citation
Bronzini, Raffaello, and Eleonora Iachini. 2014. "Are Incentives for R&D Effective? Evidence from a Regression Discontinuity Approach." American Economic Journal: Economic Policy, 6 (4): 100-134. DOI: 10.1257/pol.6.4.100Additional Materials
JEL Classification
- G31 Capital Budgeting; Fixed Investment and Inventory Studies; Capacity
- G38 Corporate Finance and Governance: Government Policy and Regulation
- L52 Industrial Policy; Sectoral Planning Methods
- O33 Technological Change: Choices and Consequences; Diffusion Processes
- O38 Technological Change: Government Policy
- R32 Other Spatial Production and Pricing Analysis
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