Investment Grants and Firms' Productivity: How Effective Is a Grant Booster Shot?

Arbeitspapier

This paper investigates the effect of awarding a second investment grant to the same firm. We implement a Regression Discontinuity Design strategy using a very rich firm-level administrative database, which allows us to link applications to grants and their scores to firms' performance. Overall, our results show a positive and significant impact of an investment grant booster shot on firms' labour productivity. This effect is significantly larger than the effect of a single grant. A more granular analysis shows a strong impact of awarding a second grant to small-sized firms. However, we found no effect on micro, medium and large-sized firms. Our results suggest that the characteristics of the targeted firms, namely firm size, matter for the effectiveness of awarding a second grant to the same firm.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IZA Discussion Papers ; No. 15779

Classification and Topics

• Classification: Wirtschaft ; Firm Behavior: Empirical Analysis ; Business Taxes and Subsidies including sales and value-added (VAT) ; Firm Performance: Size, Diversification, and Scope ; Industrial Policy; Sectoral Planning Methods
• Subject: industrial policy ; investment grants ; multiple treatments ; productivity

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Alexandre, Fernando ; Chaves, Miguel ; Portela, Miguel
• Event: Veröffentlichung
• (who): Institute of Labor Economics (IZA)
• (where): Bonn
• (when): 2022

Further information

• Handle: http://hdl.handle.net/10419/272406
• Last update: 10.03.2025, 11:42 AM CET