| Author Name | HASHIMOTO Yuki (Senior Fellow (Policy Economist), RIETI) / INOUE Toshikatsu (Shiga University) / SAKASHITA Fumiyuki (RIETI) / SUMIYA Kazuhiko (Fellow (Policy Economist), RIETI) |
|---|---|
| Creation Date/NO. | December 2025 25-E-115 |
| Research Project | Comprehensive Research on Evidence Based Policy Making (EBPM) |
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Abstract
This study estimates the effect of a repeatedly implemented capital subsidy program. When firms can reapply, estimates that ignore repeated applications may conflate the impact of the initial subsidy with subsequent ones. To isolate the effect of the initial subsidy, we adapt the framework of Cellini, Ferreira and Rothstein (2010) to a difference-in-differences setting. Using firm-level panel data merged with administrative records on Japan’s largest SME subsidy program, we find that not accounting for future subsidies overestimates the effects of the initial subsidy on sales and employment.
