• Continuous Treatment
• Industry 4.0 technology
• Local Projection Difference-in-Differences
• Nuova Sabatini 4.0
• Spillover

This thesis examines the impact of the Nuova Sabatini 4.0 policy on the productivity, efficiency, and labour market of Italian SMEs. It aims to account not only for the direct effects of the policy but also for the upstream and downstream spillover effects, utilizing the specialized weights proposed by Baratteri et al. (2023). The analysis employs the Local Projection method by Jorda (2005) and the Local Projection Difference-in-Differences (Lp-DiD) method by Dube et al. (2023). Both techniques accommodate continuous and staggered treatments; however, the Lp-DiD method allows for the evaluation of multiple treatments and avoids the "negative weight bias" by constructing "clean controls”. Results from both methodologies reveal that Nuova Sabatini 4.0 enhances employment through direct contributions and spillover effects. However, productivity and efficiency improvements are attributed solely to the direct contributions, with spillovers playing no significant role. Finally, we have focused our attention on the two sectors most represented among the Nuova Sabatini 4.0 applicants—manufacturing and agriculture—as we believe a detailed analysis of these sectors can be especially useful for policymakers. In both sectors, the Nuova Sabatini 4.0 policy has demonstrated positive and significant direct impacts on employment, productivity, and efficiency. Furthermore, in contrast to the general estimates across all sectors, both sectors experience significant downstream spillover effects on ROS. Additionally, the manufacturing sector benefits from significant upstream and downstream spillover effects on TFP.