Evaluating the Impact of Innovation Incentives: Evidence from an Unexpected Shortage of Funds
35 Pages Posted: 9 May 2011 Last revised: 19 Jan 2016
Date Written: February 15, 2011
To evaluate the effect of an R&D subsidy one needs to know what the subsidized firms would have done without the incentive. This paper studies an Italian programme of subsidies for the applied development of innovations, exploiting a discontinuity in programme financing due to an unexpected shortage of public money. To identify the effect of the programme, the study implements a regression discontinuity design and compares firms that applied for funding before and after the shortage occurred. The results indicate that the programme was not effective in stimulating innovative investment.
Keywords: R&D, public policy, evaluation
JEL Classification: O32, O38
Suggested Citation: Suggested Citation