Does language prevent policy take-up? Evidence from the Italian Start-up Act

Abstract

Does ethnolinguistic diversity prevent policy adoption? The implementation of the Italian Start-up Act of 2012 in the bilingual (German and Italian) region of Trentino-Alto Adige offers the ideal setting to investigate this question. The Act sets up a scheme of benefits which young firms can access by registering as “innovative start-ups” on a voluntary basis. We find that policy take-up has been persistently lower in areas of the region with more German speakers, as local firms with German-named administrators are less likely to register as start-ups than firms with Italian-named ones. These findings are robust to firm characteristics and regional heterogeneity and are also visible within mixed-language municipalities. Furthermore, text analysis on press sources suggests that this national policy was much more extensively covered in the Italian-language local media, while a survey of local residents indicates that German speakers have lower knowledge of national policies unless they are embedded in multilingual networks.