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Intended and unintended effects of public incentives for innovation. Quasi-experimental evidence from Italy

Author

Listed:
  • Mellace, Giovanni

    (Department of Business and Economics)

  • Ventura, Marco

    (Department of Economics and Law)

Abstract
This paper provides an extensive empirical evaluation of a policy introduced in Italy at the end of 2012 to incentivize young innovative start-up firms. Using a Regression Discontinuity Design (RDD) we estimate the causal effects of the policy on the firms’ share of intangible assets, turnover, number of employees, and number of partners. Our results indicate that two years after its implementation the policy was effective only in increasing the number of partners, thus attracting private investments, but failed, at least in the short run, in boosting innovation or increasing employment. It follows that the new investors generated by the policy might have been attracted only by the tax benefit and had little interest in innovation.

Suggested Citation

  • Mellace, Giovanni & Ventura, Marco, 2019. "Intended and unintended effects of public incentives for innovation. Quasi-experimental evidence from Italy," Discussion Papers on Economics 9/2019, University of Southern Denmark, Department of Economics.
    • Handle: RePEc:hhs:sdueko:2019_009
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    More about this item

    Keywords

    Policy evaluation; regression discontinuity design; incentives to innovations;
    All these keywords.

    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • H32 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Firm
    • L52 - Industrial Organization - - Regulation and Industrial Policy - - - Industrial Policy; Sectoral Planning Methods
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives

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