The focus of our paper is the identification of the regional effects of industrial subsidies when the presence of subsidized firms is spatially correlated. We propose a novel “spatial propensity score matching” technique that allow to correct for the spatial bias. The propensity score is estimated by an instrumental variable spatial approach applied to a probit model. The empirical analysis is based on a dataset that incorporates information on incentives to private capital accumulation by Law 488/92, mainly devoted to SME, and Planning Contracts, created for large projects. The analysis is carried out on a disaggregated territorial level, using the grid of the local labour system in Italy. The results show that the impact of subsidies on regional employment is larger if controlling for the presence of spatial effects. Spillover effects for value added and productivity are modest. Therefore the empirical analysis suggests the presence of some spatial crowding out of the programs in the labour market, where subsidized areas attract employment from neighbourhoods.
DE CASTRIS, M., Guido, P. (2014). A counterfactual evaluation of the spatial effects of public subsidies using a spatial propensity score matching approach. In Proceedings of the 61th Annual North American Meetings of theRegional Science Association International (pp.15). MILANO : AISRE.
A counterfactual evaluation of the spatial effects of public subsidies using a spatial propensity score matching approach
DE CASTRIS, MARUSCA;
2014-01-01
Abstract
The focus of our paper is the identification of the regional effects of industrial subsidies when the presence of subsidized firms is spatially correlated. We propose a novel “spatial propensity score matching” technique that allow to correct for the spatial bias. The propensity score is estimated by an instrumental variable spatial approach applied to a probit model. The empirical analysis is based on a dataset that incorporates information on incentives to private capital accumulation by Law 488/92, mainly devoted to SME, and Planning Contracts, created for large projects. The analysis is carried out on a disaggregated territorial level, using the grid of the local labour system in Italy. The results show that the impact of subsidies on regional employment is larger if controlling for the presence of spatial effects. Spillover effects for value added and productivity are modest. Therefore the empirical analysis suggests the presence of some spatial crowding out of the programs in the labour market, where subsidized areas attract employment from neighbourhoods.I documenti in IRIS sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.
