Subsidies, productivity and labour demand

Abstract

"This study aims to help analysing the impact of public economic funding. Using the data of the IAB establishment panel from 1996 to 2009, we study the effect of public funding on a number of indicators that give insight into the development of companies. For this purpose, conditional 'difference-in-differences' estimators are derived using a Propensity Score Matching approach. Funded companies were found to invest more and request more labour. But on average, such companies receive funding that had already invested more previously than companies that did not receive support. On the other hand, there is evidence that the funded companies reduce their investments shortly before funding. This could point to deadweight effects. The costs for one additional job after 5 years amount to EURO 4,900 worth of funding. In contrast, there are no or hardly any changes in terms of wages, productivity and value added of the companies." (Author's abstract, IAB-Doku) ((en))

Cite article

Kölling, A. (2014): Wirtschaftsförderung, Produktivität und betriebliche Arbeitsnachfrage. In: Journal for labour market research, Vol. 47, No. 1-2, p. 143-164. DOI:10.1007/s12651-013-0134-1