Do business subsidies facilitate employment growth?

Arbeitspapier

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.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: ETLA Discussion Papers ; No. 1235

Classification and Topics

• Classification: Wirtschaft ; Labor Demand ; Market Structure, Firm Strategy, and Market Performance: General ; Technological Change: Choices and Consequences; Diffusion Processes ; Technological Change: Government Policy
• Subject: public subsidies ; technology policy ; employment growth ; Finland

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Koski, Heli ; Pajarinen, Mika
• Event: Veröffentlichung
• (who): The Research Institute of the Finnish Economy (ETLA)
• (where): Helsinki
• (when): 2011

Further information

• Handle: http://hdl.handle.net/10419/44580
• Last update: 10.03.2025, 11:42 AM CET