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Designing Public Assistance Programs

Paper Session

Sunday, Jan. 8, 2023 1:00 PM - 3:00 PM (CST)

Hilton Riverside, Magazine
Hosted By: American Economic Association
  • Chair: Siobhan O'Keefe, Davidson College

Managerial Input and Firm Performance: Evidence from a Policy Experiment

Vincenzo Scrutinio
,
University of Bologna
Francesco Manaresi
,
Organization for Economic Co-operation and Development and Bank of Italy
Alessandro Palma
,
Gran Sasso Science Institute (GSSI) and University of Rome Tor Vergata
Luca Salvatici
,
Roma Tre University

Abstract

We study the effects of a subsidy program designed to boost small and medium enterprises’ export capabilities through a Temporary Export Manager (TEM), hired for at least 6 months to provide consulting on how to reach foreign markets. Firms applied online for the subsidy and vouchers to hire TEMs were allocated on a first-come, first-served basis. We use a difference-in-differences design to compare the performance of firms that nearly got the subsidy with those that barely did not. Eligible firms experienced a large increase in revenues, return on equity, profits and value added per employee, accompanied by a significant growth in export in extra-EU markets four years after receiving the subsidy. The gains were larger for the least productive and smaller firms and effects were heterogeneous across TEM providers. TEMs were also effective in stimulating ‘good’ labor demand: besides intensifying exports, firms increased their workforce by nearly 13%, mainly in full-time and permanent employees. Results of a survey conducted on TEM providers suggest that collaboration between beneficiary and providers persisted after the initial contract and that the availability of other services such as support for digitalization was associated with larger improvements in performance for the beneficiary firms.

How Should We Design Parental Leave Policies? Evidence from Two Reforms in Italy

Valeria Zurla
,
Brown University

Abstract

This paper studies the role of different policy instruments in the design of parental leave policies. Using Italian administrative data on the universe of working mothers, I implement a difference-in-differences design around two unemployment insurance reforms that increased, respectively, the level of benefits and the duration of benefits without offering job protection. I provide novel insights on the effects of different parental leave parameters on women’s choices, labor market outcomes and welfare. I find that when cash benefits become more generous, many mothers choose to forgo job protection and substitute out of the standard parental leave program. While this brings them greater financial security in the short run, it drives long-lasting declines in employment and earnings, most of which occur after the benefits are exhausted. Using a revealed preference approach, I find that mothers attribute a large implicit value to transfers after childbirth relative to job protection. I explore the role of constraints and behavioral frictions in rationalizing women’s choices. Finally, I develop a conceptual framework to evaluate the welfare effects of parental leave policies. The analysis demonstrates job protection’s key role in reducing the incentive costs of parental leave policies: increasing the level of benefits with job protection is welfare-improving. Relaxing constraints, by increasing childcare availability, is also welfare-improving.

Welfare Implications of Electric-Bike Subsidies: Evidence from Sweden

Anders Anderson
,
Stockholm School of Economics
Harrison Hong
,
Columbia University

Abstract

We evaluate a large-scale Swedish electric bike (E-bike) subsidy program in 2018, similar to those implemented in many other countries. We combine administrative, insurance and survey data to address challenges of welfare analyses such as non-additionality. We find (1) complete pass through of the average $494 subsidy to consumers, (2) a near doubling of E-bikes sold but one-third of the adopters are non-additional, and (3) a savings of 1.3 tons of carbon emissions during the life of the E-bike. At a cost of $589 per ton, the program is an expensive way to reduce carbon emissions from driving.

Investment Tax Credits and the Response of Firms

Adrian Lerche
,
Institute for Employment Research

Abstract

This paper estimates the direct effects of investment tax credits on firms’ production behavior and the additional indirect effects arising from agglomeration economies. Exploiting a change in tax credit rates by firm size in Germany, I find that manufacturing firms increase capital and employment, with labor demand in information and communication technology-intensive industries shifting towards college-educated workers. Using geolocation data, I show that agglomeration benefits lead to a sizable further firm production expansion with these benefits materializing within distances of 5 kilometers. Worker flows from the service sector and from non-employment, rather than between manufacturing firms, explain the employment effects.

Does Social Assistance Disincentivise Employment, Job Formality, and Mobility? Learning from Past Unconditional Cash Transfer Programs in Indonesia

Dyah Pritadrajati
,
Australian National University

Abstract

How do cash transfers affect employment, job formality, and mobility, especially in times of crises and economic recovery? I examine this question in the context of Indonesia’s major unconditional cash transfer (UCT) programmes, rolled out in a targeted manner in response to adverse economic shocks. Identification is based on a generalised difference-in-differences with propensity score matching approach exploiting three waves of nationally-representative longitudinal data on household transfer receipts and labour market outcomes. Annual retrospective data in each survey wave allows me to look at immediate effects, potentially important due to the transient nature of the transfers. Consistent with income and substitution effects, the cash transfers reduce employment and job formality, especially among lower skill groups. Relatively larger effects on job formality highlight the importance of this margin of adjustment related to the targeting design.
JEL Classifications
  • H2 - Taxation, Subsidies, and Revenue