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Leveraging the rationing of funds as an ideal Regression Discontinuity Design, we characterize the heterogeneity of treatment effects and cost\u2010per\u2010new\u2010job across inframarginal firms and estimate the cost\u2010effectiveness 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%.<\/jats:p>","DOI":"10.3982\/ecta21319","type":"journal-article","created":{"date-parts":[[2025,6,2]],"date-time":"2025-06-02T01:09:42Z","timestamp":1748826582000},"page":"747-778","source":"Crossref","is-referenced-by-count":16,"title":["Making Subsidies Work: Rules versus Discretion"],"prefix":"10.3982","volume":"93","author":[{"given":"Federico","family":"Cingano","sequence":"first","affiliation":[{"name":"Directorate General for Economics, Statistics, and Research, Bank of Italy"}],"role":[{"vocabulary":"crossref","role":"author"}]},{"given":"Filippo","family":"Palomba","sequence":"additional","affiliation":[{"name":"Department of Economics, Princeton University"}],"role":[{"vocabulary":"crossref","role":"author"}]},{"given":"Paolo","family":"Pinotti","sequence":"additional","affiliation":[{"name":"Social and Political Science Department, Bocconi University"},{"name":"BAFFI Center, CEPR"}],"role":[{"vocabulary":"crossref","role":"author"}]},{"given":"Enrico","family":"Rettore","sequence":"additional","affiliation":[{"name":"Department of Economics and Management, University of Padua"},{"name":"FBK-IRVAPP, IZA"}],"role":[{"vocabulary":"crossref","role":"author"}]}],"member":"2359","published-online":{"date-parts":[[2025]]},"reference":[{"key":"ecta200788-bib-0001","doi-asserted-by":"crossref","DOI":"10.1016\/j.euroecorev.2020.103490","volume":"128","author":"Akcigit","year":"2020","journal-title":"European Economic Review"},{"issue":"512","key":"ecta200788-bib-0002","doi-asserted-by":"crossref","first-page":"1331","DOI":"10.1080\/01621459.2015.1012259","volume":"110","author":"Angrist","year":"2015","journal-title":"Journal of the American Statistical Association"},{"key":"ecta200788-bib-0003","author":"Baltrunaite","year":"2018","journal-title":"The Journal of Law, Economics, and Organization"},{"key":"ecta200788-bib-0004","doi-asserted-by":"crossref","unstructured":"Bandiera, Oriana, Michael Carlos Best, Adnan Qadir Khan, and Andrea Prat (2020): \u201cThe Allocation of Authority in Organizations: A Field Experiment With Bureaucrats,\u201d Technical Report, National Bureau of Economic Research.","DOI":"10.3386\/w26733"},{"key":"ecta200788-bib-0005","volume-title":"Quality of Governance and the Design of Public Procurement","author":"Bar\u00e1nek","year":"2020"},{"issue":"3","key":"ecta200788-bib-0006","doi-asserted-by":"crossref","first-page":"99","DOI":"10.1257\/jep.34.3.99","volume":"34","author":"Bartik","year":"2020","journal-title":"Journal of Economic Perspectives"},{"issue":"9","key":"ecta200788-bib-0007","doi-asserted-by":"crossref","first-page":"578","DOI":"10.1016\/j.jpubeco.2010.06.006","volume":"94","author":"Becker","year":"2010","journal-title":"Journal of Public Economics"},{"issue":"4","key":"ecta200788-bib-0008","first-page":"29","volume":"5","author":"Becker","year":"2013","journal-title":"American Economic Journal: Economic Policy"},{"issue":"5","key":"ecta200788-bib-0009","doi-asserted-by":"crossref","first-page":"1648","DOI":"10.1257\/aer.20170491","volume":"109","author":"Bloom","year":"2019","journal-title":"American Economic Review"},{"key":"ecta200788-bib-0010","doi-asserted-by":"crossref","unstructured":"Bosio, Erica, Simeon Djankov, Edward L. 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