Policy-makers at regional, national and European Union (EU) levels of governance use a variety of subsidy programmes to stimulate firm-level innovation. Against this backdrop, this paper investigates three important issues that have not received sufficient attention in the literature: (1) whether evaluating the impact of subsidies from each individual source is biased by ignoring firms that receive a mix of subsidies from different sources at the same point in time; (2) whether receiving a mix of subsidies from regional, national and EU sources crowds out firm-level innovation; and (3) if effective, whether subsidy mix stimulates forms of innovation with higher private or social returns. The findings demonstrate that ignoring subsidy mix significantly biases evaluations of subsidies from individual sources. Moreover, subsidy mix can be a highly effective means of stimulating forms of firm-level innovation with the highest social returns, precisely where market and systemic failures are most acute.

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The subsidiaries of foreign-owned multinational firms make significant contributions to national Research and Development (R&D) in many host countries. Policymakers in host countries often support subsidiaries’ R&D efforts, through R&D grants and R&D tax credits. A key objective of this funding is to leverage R&D-driven firm performance benefits for the host economy. However, the subsidiary's parent firm may decide not to commercially exploit the results from host country-funded R&D projects, in the host country. Therefore, supporting subsidiaries’ R&D presents a unique risk, that significant amounts of scarce public R&D funding may translate into little, or no firm performance payoffs for the host economy. To address this issue, we construct a unique panel dataset, containing 24,404 observations of firms in Ireland over a 10-year period. Using this rich data, we first evaluate the impact of R&D grants and R&D tax credits on subsidiaries’ R&D. We then examine the link between policy-induced R&D from each policy instrument, and subsidiaries’ firm performance in the host country. Our study provides the first evaluation of (1) whether public R&D funding stimulates additional R&D investment in subsidiaries, (2) whether policy-induced R&D drives subsidiaries’ firm performance in the host country, and (3) the differential effects of R&D grants and R&D tax credits. We find that both R&D policy instruments drive subsidiary R&D, and that the policy-induced R&D results in substantial host country improvements in turnover, exports, and value added. Our results suggest several policy implications, particularly for economies pursuing an R&D strategy which targets foreign-owned subsidiaries.

This paper examines the relationship between unemployment and psychological well-being before and during the Great Recession across 249 UK local authority districts (LADs). Substantial evidence demonstrates that unemployment has a large negative effect on psychological well-being. However, unique social norms develop in geographical areas with high unemployment rates, which significantly reduce the negative impact of unemployment on well-being. Though the post-2007 Great Recession period was characterized by widespread unemployment, few studies have examined the impact of this crisis on well-being in high-and low-unemployment local areas. The analysis constructs a rich panel data set which follows 15,798 individuals from 1998 to 2014, and applies difference-indifferences fixedeffects and general method of moments estimators. The findings indicate that unemployment had a large negative impact on psychological well-being. However, the magnitude of this effect did not change (or was even slightly lower) during the Great Recession. Furthermore, the unemployment social norm also ceased to have any additional effect on well-being during the Great Recession in high-unemployment LADs, as opposed to the pre-recession period.

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