Events and Meetings of Italian Statistical Society, Statistics and Demography: the Legacy of Corrado Gini

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Public subsidies, TFP and Efficiency: a tale of complex relationships
Cristina Bernini, Augusto Cerqua, Guido Pellegrini

Last modified: 2015-09-05


The paper shows that a suitable decomposition of TFP can be applied to a large sample of subsidized firms for a relevant period of time, allowing an evaluation of the impact of subsidies on either the roles of technical progress and technical efficiency change, or scale and allocative efficiency change as determinants of granted firms’ long-term growth. We measure and decompose TFP using a Stochastic Frontier Analysis (SFA). The impact of capital subsidies on the different component of TFP is captured by a quasi–experimental method (Multiple RDD), exploiting the conditions for a local random experiment created by Law 488/92 (L488), which has been an important policy instrument for reducing territorial disparities in Italy. 

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