How are growth and productivity in private firms affected by public subsidy? Evidence from a regional policy

Bernini, Cristina; Pellegrini, Guido

doi:10.1016/j.regsciurbeco.2011.01.005

Cited by 193 publications

(139 citation statements)

References 22 publications

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“…The increase in the number of staff negatively affects productivity growth if there is no sufficient increase in value added at the same time. This finding is in line with earlier studies by Bernini and Pellegrini (2011) and Koski and Pajarinen (2014). In Panels B and C of Table 3, we study in greater detail why no positive productivity effect is observed over the five-year period after a subsidy is granted.…”

supporting

confidence: 92%

“…The productivity effect of R&D subsidies is found to be insignificant in high-tech firms in the U.S. (Irwin and Klenow, 1996). Similarly, no evidence is found that regional subsidies improve firm productivity in Britain (Criscuolo et al, 2012) or in Italy (Bernini and Pellegrini, 2011;Cer-1 Empirical literature indicates that returns on R&D differ by firm characteristics (e.g., Hall et al, 2008;Hall et al, 2009;Ortega-Argilés et al, 2010;Ortega-Argilés et al, 2011). 2 Many authors have reported that R&D subsidies stimulate private investments (e.g.…”

Section: Introductionmentioning

confidence: 99%

“…At the start of an R&D project, SMEs might recruit new employees (or re-allocate old employees and other resources within the firm), and this activity could reduce productivity growth in the short term (e.g. Bernini and Pellegrini, 2011). Thus, this negative subsidy effect on productivity is understandable if employment growth is attributable to firms' actions to enhance innovation capacity (e.g., firms recruit new employees with more human capital).…”

Section: Introductionmentioning

confidence: 99%

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R&D subsidies and productivity in SMEs

Karhunen

Huovari

2015

Small Bus Econ

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This dissertation consists of an introductory chapter and four separate empirical studies which study higher education and productivity in Finland. Introductory chapter presents shortly the motivation, background and main results of this thesis. First three articles focus on the relationship between working while studying, dropout behavior and later labor market outcomes at individual level. Fourth article examines how subsidies affect labor productivity at the firm level.The first article of this thesis studies how working while studying relates to earnings after graduation from university or polytechnic. Analysis focuses on working while studying and earnings over two year period after graduation. The results show that early work experience is related to higher earnings right after graduation year, but instrumental variable estimations find no significant causal effect for university students.The second article explores on the relationship between working while studying and migration. Migration propensities are studied up to three years after graduation. Results show that working while studying can partly explain why the mobility of highly educated people has declined. We find that that there are differences by study region and earlier migration behavior.The third article examines the relationship between the decision to drop out from university and labor market outcomes. Results indicate that compared to similar university graduates, the dropouts' annual earnings are on average 11,000 euros lower four years after the dropout decision. Dropouts have also a higher probability of being self-employed than similar graduates.The fourth article examines the effect of R&D subsidies on labour productivity. Study uses firm-level data on Finnish SMEs from 2000 to 2012 and apply a combined matching and difference-in-differences method to control for selection bias. Study does not find significant positive effect on labour productivity over the five-year period after a subsidy is granted.

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supporting

confidence: 92%

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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R&D subsidies and productivity in SMEs

Karhunen

Huovari

2015

Small Bus Econ

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“…Harris and Robinson (2004) find that firm-level investment support in the UK had no effect on productivity by comparing the supported firms to similar firms within the supported area. Bernini and Pellegrini (2011) study the impact of firm-level investment support in the southern Italian regions over the period 1996-2004. Employing a difference-in-difference matching estimator, and taking selection on observables and non observables into account they find a higher growth in output, employment and fixed assets in subsidised firms but a lesser increase in the TFP than in unsubsidised firms.…”

Section: Zero/negative Evidence Of Firm-level Investment Supportmentioning

confidence: 99%

“…In contrast, other studies do not find positive effects (Bronzini and de Blasio, 2006). Similarly, the employment impact of capital subsidies has been found doubtful (Gabe and Kraybill, 2002), and the effect of firm-level investment support on efficiency and productivity is found to be negligible or even negative (Beason and Weinstein 1996;Lee 1996;Bagella and Becchetti 1998;Bergström 2000;Harris and Robinson 2004;Bernini and Pellegrini 2011). Moreover, there is a considerable variation in the estimated impact of investment support which, among others, reflects differences in circumstances between countries, regions, sectors and firms, differences in the design of policy and delivery (policy implementation details), and differences in the quality of the data and the analytical methods used in the empirical studies.…”

mentioning

confidence: 93%

The Role of Additionality in the EU Cohesion Policies: An Example of Firm-Level Investment Support

Brandsma

Kancs

Ciaian

2013

European Planning Studies

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Abstract: Additionality is one of the key principles driving the functioning of the EU Cohesion Policies (ECP). The present paper studies how additionality affects the impact of firm-level investment support on firm investment behaviour in differently competitive markets. We find that the investment additionality and the level of competition importantly affect the firm investment behaviour. Imposing additionality to the ECP investments in perfectly competitive markets causes distortions in the capital market and leads to lower welfare levels. In contrast, without the enforcement of additionality, the distortions are zero and the investment support fully benefits the firms. In an imperfectly competitive environment the firm-level investment support may increase investment and may be welfare increasing with and without the enforcement of the investment additionality. Terms of use: Documents in

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The Impact of Regional and National Policies in the Development of the Italian Mezzogiorno

Pellegrini

2017

Advances in Spatial Science

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How are growth and productivity in private firms affected by public subsidy? Evidence from a regional policy

Cited by 193 publications

References 22 publications

R&D subsidies and productivity in SMEs

R&D subsidies and productivity in SMEs

The Role of Additionality in the EU Cohesion Policies: An Example of Firm-Level Investment Support

The Impact of Regional and National Policies in the Development of the Italian Mezzogiorno

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