In:
American Economic Review, American Economic Association, Vol. 109, No. 1 ( 2019-01-01), p. 48-85
Abstract:
We exploit changes in the area-specific eligibility criteria for a program to support jobs through investment subsidies. European rules determine whether an area is eligible for subsidies, and we construct instrumental variables for area eligibility based on parameters of these rule changes. Areas eligible for higher subsidies significantly increased jobs and reduced unemployment. A 10-percentage point increase in the maximum investment subsidy stimulates a 10 percent increase in manufacturing employment. This effect exists solely for small firms: large companies accept subsidies without increasing activity. There are positive effects on investment and employment for incumbent firms but not Total Factor Productivity. (JEL E24, G31, H25, L25, L52, R23)
Type of Medium:
Online Resource
ISSN:
0002-8282
DOI:
10.1257/aer.20160034
Language:
English
Publisher:
American Economic Association
Publication Date:
2019
detail.hit.zdb_id:
203590-X
detail.hit.zdb_id:
2009979-4
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