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Do local subsidies to firms create jobs? Counterfactual evaluation of an Italian regional experience
Author(s) -
Porro Giuseppe,
Salis Valentina
Publication year - 2018
Publication title -
papers in regional science
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.937
H-Index - 64
eISSN - 1435-5957
pISSN - 1056-8190
DOI - 10.1111/pirs.12317
Subject(s) - counterfactual thinking , subsidy , incentive , economics , outlier , short run , perspective (graphical) , public economics , business , macroeconomics , microeconomics , market economy , philosophy , epistemology , artificial intelligence , computer science
A counterfactual analysis is performed to evaluate the impact on employment of four programmes providing financial incentives to firms in Lombardy (Italy) between 2008 and 2013. While linear estimates suggest that the programmes have positive effects on short‐run employment growth when incentives are sufficiently high, a non‐parametric analysis shows that the policy is, on the whole, ineffective and that the results in linear models are due to small groups of outliers, which received very high subsidies. Data allow for a short run analysis only, but the results cast some doubts on the policy effectiveness also in a medium‐long run perspective.