Riccardo Faini CEIS Seminars
Paolo Pinotti (Università Bocconi)

Making Subsidies Work: Rules vs. Discretion

Riccardo Faini CEIS Seminars
When

Friday, November 18, 2022 h. 12:00-13:30

Where

Room A - 1st Floor – Building B
Facolta' di Economia
Universita' degli Studi di Roma 'Tor Vergata'
Via Columbia 2, Roma

Description

Paolo Pinotti (Università Bocconi)

We estimate the employment effects of a large program of public investment subsidies to private firms that ranked applicants on a score reflecting both objective rules and local politicians' discretion. Leveraging the rationing of funds as an ideal RDD, we characterize the heterogeneity of treatment effects and cost-per-new-job across inframarginal firms, and we estimate the cost effectiveness of subsidies under factual and counterfactual allocations. Firms ranking high on objective rules and firms preferred by local politicians generated larger employment growth on average, but the latter did so at a higher cost-per-job. We estimate that relying only on objective criteria would reduce the cost-per-job by 11%, while relying only on political discretion would increase such cost by 42%.

Riccardo Faini CEIS Seminars list

Contacts

Scientific committee

Mariangela Zoli, Tiziano Arduini, Furio Camillo Rosati


Organisation

Barbara Piazzi
CEIS
+39-06-7259.5601
piazzi@ceis.uniroma2.it