The Impact of Subsidies for Small and Medium-sized Firms in Japan: A Regression Discontinuity Design Approach

Author Name SEKIZAWA Yoichi (Senior Fellow, RIETI) / MAKIOKA Ryo (Fellow (Policy Economist), RIETI) / YAMAGUCHI Akira (Hitotsubashi University / current: NISTEP)
Creation Date/NO. June 2020 20-J-032
Research Project Comprehensive Research on Evidence Based Policy Making (EBPM)
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The paper analyzes the causal effects of the subsidies for small and medium-sized firms in Japan (collectively called the Monozukuri Subsidy), provided by the Japanese Small and Medium Enterprise Agency. Given the uniqueness of its selection process, where a firm's acceptance is determined discontinuously by scores granted by selection committees, we utilize a fuzzy regression discontinuity design (RDD) approach in order to derive causal effects of the subsidies. In addition, our RDD estimates for different years are aggregated using a meta-analysis framework. We do not find a significant difference between treated and control firms on their value-added, value-added per worker, employment, or capital. The results suggest that its fuzzy selection process should be improved to derive robust and statistically significant estimates.