Local Authority Policies: The Case of Trentino (Le Politiche Promosse Dagli Enti Locali: Il Caso Del Trentino)

Abstract

Empirical literature findings do not provide a clear-cut interpretation of the effects of public aid on performances of firms. We contribute to this literature analysing the effects of public regional financial subsidies on investment using a unique dataset covering all the firms in the Italian province of Trentino with a record of public aid granted to them in the last 15 years. We find a temporary effect on investment level together with a permanent positive effects on size of firms, but no effect is found on factors substitution nor on technical change. Moreover, subsidies do not improve either profitability or productivity. These results help better define the scope of local aid.

Note: Downloadable document is in Italian.

Keywords: Regional policy, public subsidies, propensity score matching

JEL Classification: R11, R58, C31