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
Date Written: June 1, 2020
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: Suggested Citation