Evaluating Business Incentives Through DEA. An Analysis on Capitalia Firm Data

Destefanis, Sergio and Storti, Giuseppe (2005): Evaluating Business Incentives Through DEA. An Analysis on Capitalia Firm Data. Published in: DISES Working Papers No. 3.173 (14 November 2005): pp. 1-29.

Abstract

We analyse the impact of business incentives on the technical efficiency of Italian manufacturing firms. Using DEA allows a novel treatment of the omitted-variable and sample-selection bias. Through DEA one carries out direct comparisons between similar observations akin to those carried out in non-parametric matching analysis. The selection bias can be treated by conditioning these comparisons on the variables ruling the distribution of state aid. We separately utilise four Capitalia surveys, in order to test whether policy effectiveness has changed during the 1990s. Moreover we consider separately the effects of the three main kinds of state aid to manufacturing (soft loans, grants, and tax rebates). The results indicate that state aid had a negative impact on technical efficiency. However, this impact mostly relates to soft loans, and looses significance in the late 1990s.

• Item Type: MPRA Paper
• Language: English
• Keywords: Local development policies, Policy evaluation, Technical efficiency, Frontier analysis.
• Subjects: G - Financial Economics > G3 - Corporate Finance and Governance > G32 - Financing Policy ; Financial Risk and Risk Management ; Capital and Ownership Structure ; Value of Firms ; Goodwill; H - Public Economics > H2 - Taxation, Subsidies, and Revenue > H25 - Business Taxes and Subsidies; O - Economic Development, Innovation, Technological Change, and Growth > O2 - Development Planning and Policy > O20 - General; O - Economic Development, Innovation, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity > O40 - General

References

Bagella M., Becchetti L. (1998), La politica degli incentivi creditizi in Italia tra la fine degli anni ’80 e l’inizio degli anni ’90, in M. Bagella (a cura di), Gli incentivi di politica industriale: presupposti teorici e valutazioni empiriche, Quaderni di politica industriale, n. 21, Osservatorio sulle piccole e medie imprese, Mediocredito Centrale, Roma.

Bagella M., Becchetti L., Londoño Bedoya D.A. (2004), Investment and Export Subsidies in Italy: Who Gets Them and What Is Their Impact on Investment and Efficiency, Rivista di Politica Economica, mar.-apr., 61-101.

Banker, R. (1996), Hypothesis Tests using Data Envelopment Analysis, Journal of Productivity Analysis, 7, 139-159.

Banker R.D., Morey R. C. (1986), Efficiency Analysis for Exogenously Fixed Inputs and Outputs, Operatins Research, 34, 513-521.

Battistin E., Gavosto A., Rettore E. (2001), Why Do Subsidized Firms Survive Longer? An Evaluation of a Program Promoting Youth Entrepreneurship in Italy, in M. Lechner M., F. Pfeiffer (eds.), Econometric Evaluation of Labour Market Policies, Physica-Verlag, Heidelberg.

Biagioli M., Caroleo F.E., Destefanis S. (eds.) (1999), Struttura della contrattazione, differenziali salariali e occupazione in ambiti regionali, Edizioni Scientifiche Italiane, Napoli.

Blundell R., Costa-Dias M. (2000), Evaluation Methods for Non-Experimental Data, Fiscal Studies, 21 (4), 427-468.

Bondonio D. (2002), Evaluating the Employment Impact of Business Incentive Programs in EU Disadvantaged Areas. A case from Northern Italy, Atti della XXIII Conferenza Italiana di Scienze regionali, Napoli.

Bondonio D., Martini A. (2001), Using Event History Analysis to Evaluate the Impact of Investment Subsidies Targeted to Youth-Owned Firms, Atti della XLI Riunione Scientifica SIS, Roma.

Carlucci C., Pellegrini G. (2001), La valutazione degli aiuti alle imprese: modelli e metodi statistici, Atti della XLI Riunione Scientifica SIS, Roma.

Carlucci C., Pellegrini G. (2003), Gli effetti della legge 488/92: una valutazione dell'impatto occupazionale sulle imprese agevolate, no. 2, 267-286.

Cooper W.W., Seiford L.M., Tone K. (2000), Data Envelopment Analysis, Kluwer, Boston.

D’Acunto S., Destefanis S., Musella M. (2004), Exports, Supply Constraints and Growth: An Investigation Using Regional Data, International Review of Applied Economics, 18, 167- 89.

Del Monte A., Giannola A. (1997), Istituzioni economiche e Mezzogiorno, Nuova Italia Scientifica, Roma. Del Monte A., Scalera D. (2001), The Life Duration of Small Firms Born Within a Start-up Programme: Evidence from Italy, Regional Studies, 35, 11-21.

Destefanis S. (2000), Differenziali territoriali di produttività ed efficienza e sviluppo dualistico, Lavoro e relazioni industriali, no. 2, 103-143.

Destefanis S., Storti G. (2002), Measuring cross-country technological catch-up through variable-parameter FDH, Statistical Methods and Applications, 11, 109-125.

Destefanis S., Taddeo A. , Tornatore M. (2004) The stock of human capital in the Italian regions. Working Paper 3.142, DISES, University of Salerno.

Destefanis S., Sena V. (2005), Public capital and total factor productivity: New evidence from the Italian regions, 1970-98, Regional Studies, 39 (5), 603 – 617.

Farrell M.J. (1957), The Measurement of Productive Efficiency, Journal of the Royal Statistical Society, series A 120 (3), 253-281.

Fried H., Lovell C.A.K., Schmidt S.S. (eds.) (1993), The Measurement of Productive Efficiency: Techniques and Applications, Oxford University Press, London.

Heckman, J., LaLonde R., Smith J. (1999), The Economics and Econometrics of Active Labor Market Programs, in O. Ashenfelter, D. Card (ed.), Handbook of Labor Economics, Vol. IV, North-Holland, Amsterdam.

Lodde S., Manca F., Paci R. (1993), Incentivi finanziari e sviluppo industriale in Sardegna, CUEC, Cagliari.

Martini A., Rettore E., Trivellato U. (2003), La valutazione delle politiche del lavoro in presenza di selezione: migliorare la teoria, i metodi o i dati?, Politica Economica, no. 3, 301-342.

Mazzotta F. (1999), Efficienza tecnica delle nuove imprese nelle aree in crisi: un’analisi sulla legge 44, L’Industria, 20 (3), 511-536.

Ministero dell’Industria (2000a), Indagine sulla legge 488/92, Roma.

Ministero dell’Industria (2000b), Indagine sulla legge 46/82, Roma.

Nese A., O'Higgins S.N. (2005), In and Out of the Capitalia Sample: Evaluating Attrition Bias, Working Paper n. 3.174, Dipartimento di Scienze Economiche e Statistiche, Università di Salerno.

Pellegrini G. (1999), L’efficacia degli aiuti alle imprese nel Mezzogiorno. Il vecchio e il nuovo intervento, in A. Giannola (ed.), Mezzogiorno tra Stato e Mercato, Il Mulino, Bologna.

Prosperetti L., Varetto F. (1991), I differenziali di produttività Nord- Sud nel settore manifatturiero, il Mulino, Bologna.

Tørgersen A.M., Førsund F.A., Kittelsen S.A.C. (1996), Slack-adjusted efficiency measures and ranking of efficient units, Journal of Productivity Analysis, 7, 379-398.