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Title:Do business subsidies facilitate employment growth? PDF Logo
Authors:Koski, Heli
Pajarinen, Mika
Issue Date:2011
Series/Report no.:ETLA discussion paper 1235
Abstract:We use data from 15508 Finnish companies with 10 or more employees for the years 2003-2008 to explore the relationship between employment growth and three endogenously determined business subsidy types (i.e. employment subsidy, R&D subsidy and other business subsidies). We find a positive contemporary relationship between all business subsidy types and employment growth. Our findings suggest that R&D subsidies further contribute to the firms' employment for one year after and employment and other subsidies for three years after the reception of subsidies. After that, the differences between the subsidized and non-subsidized firms vanish. We further find, in line with the empirical studies of Harrison et al. (2008) and Hall et al. (2008), that both product innovation and sales growth from a firm's old products contribute to the firm's employment growth. Process innovation, instead, does not seem to have any significant effect on employment.
Subjects:public subsidies
technology policy
employment growth
Finland
JEL:J23
L10
O33
O38
Document Type:Working Paper
Appears in Collections:ETLA Discussion Papers, Research Institute of the Finnish Economy (ETLA)

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