The Impact of Digitalization Policies. Evidence from Italy’s Hyper-depreciation of Industry 4.0 Investments

DF Working Papers, N.6, 2020

34 Pages Posted: 6 Aug 2020 Last revised: 17 Feb 2021

See all articles by Barbara Bratta

Barbara Bratta

Ministry of Economy and Finance, Italy

Livio Romano

Confindustria

Paolo Acciari

Ministry of Economy and Finance, Italy

Francesca Mazzolari

University of California, Irvine; IZA Institute of Labor Economics

Date Written: June 1, 2020

Abstract

This paper investigates the role played by hyper-depreciation of tangible assets, a fiscal incentive introduced for the first time by the Italian Government in 2017, in sustaining private investments in advanced digital technologies, and, indirectly, in affecting firms’ labor demand. By making use of a unique firm-level data set that links administrative records on tax returns and job flows with information from company balance-sheets, the paper addresses the following questions: what was the take-up of the fiscal incentive in its first year of implementation? What are the characteristics of recipient firms? What is the impact of subsidized investments on firms’ hiring and separations? Overall, the results of the analysis suggest that hyper-depreciation has been so far an effective means to support the digital technology transformation of the Italian production system and that such transformation has had a positive net effect on employment.

Keywords: digitalization, innovation policy, labor demand, skills

JEL Classification: J24, O25, O33

Suggested Citation

Bratta, Barbara and Romano, Livio and Acciari, Paolo and Mazzolari, Francesca, The Impact of Digitalization Policies. Evidence from Italy’s Hyper-depreciation of Industry 4.0 Investments (June 1, 2020). DF Working Papers, N.6, 2020, Available at SSRN: https://ssrn.com/abstract=3648046 or http://dx.doi.org/10.2139/ssrn.3648046

Barbara Bratta

Ministry of Economy and Finance, Italy ( email )

Via XX Settembre 97
Rome, Rome 00187
Italy

Livio Romano (Contact Author)

Confindustria ( email )

Viale dell'astronomia 30
Rome, 00144
Italy
+39 065903657 (Phone)

Paolo Acciari

Ministry of Economy and Finance, Italy ( email )

Via XX Settembre 97
Rome, Rome 00187
Italy

Francesca Mazzolari

University of California, Irvine ( email )

Campus Drive
Irvine, CA 62697-3125
United States

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

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