Substitution Effect of Public Support Programs at Local Level

Abstract

The paper evaluates the principle of addi-tionality in public support programs at local level. In the evaluation of public support policies a key question is whether the policy has made a differ-ence over what would have otherwise occurred. This could be measured by different ways as out-put, behavioral or input additionality. In this paper we analyze the impact of public support programs on input additionality as the extent to which the subsidy is refected in increased expenditures by supported subjects through the measurement of substitution effect. We studied public investment subsidies in the case of education support in Slo-vakia. We identifed the substitution effect in 10% of the analyzed municipalities. There are several differences in outcomes.An important factor is the size of the city as larger municipalities reduce their other activities when obtaining the support. We also showed that less developed regions have a lower tendency to misuse the support programs. The more de-veloped regions and cities reduce their own spending on a given priority when obtaining the support.