Intended and Unintended Effects of Public Incentives for Innovation. Quasi-Experimental Evidence From Italy

Discussion Papers on Business and Economics, University of Southern Denmark, 9/2019

24 Pages Posted: 5 Sep 2019

See all articles by Giovanni Mellace

Giovanni Mellace

University of Southern Denmark - Department of Business and Economics

Marco Ventura

Istituto di Studi e Analisi Economica (ISAE)

Date Written: August 28, 2019

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.

Keywords: policy evaluation, regression discontinuity design, incentives to innovations

JEL Classification: H32, L52, C21, O31

Suggested Citation

Mellace, Giovanni and Ventura, Marco, Intended and Unintended Effects of Public Incentives for Innovation. Quasi-Experimental Evidence From Italy (August 28, 2019). Discussion Papers on Business and Economics, University of Southern Denmark, 9/2019, Available at SSRN: https://ssrn.com/abstract=3444863 or http://dx.doi.org/10.2139/ssrn.3444863

Giovanni Mellace (Contact Author)

University of Southern Denmark - Department of Business and Economics ( email )

DK-5230 Odense
Denmark
+4565509294 (Phone)
65509294 (Fax)

Marco Ventura

Istituto di Studi e Analisi Economica (ISAE) ( email )

Piazza dell' Indipendenza 4
I-00185
Italy

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