Do Capital Subsidies Affect Growth in the Tourism Industry?

The Italian literature on the evaluations of the impact of L. 488/1992 public subsidies deals with the estimation of treatment effects on manufacturing firms, while at now the impact on tourism firms has been never investigated. The aim of the paper is to evaluate the causal effect of L. 488 policy intervention to tourism industry in the case of a continuous treatment, exploring the impact of differences in treatment level on tourism firms performance. A new estimation approach is used (Adorno, Bernini and Pellegrini; 2007) for the evaluation of the effects of a continuous treatment based on a two-step matching method: in the first step, treated and not treated units are matched on the basis of a propensity score function; in the second step, among matched units in the first step, another matching procedure pair units with similar treatment level. The impact of L.488 on tourism firms is evaluated with respect to the main performance variables.