R&D subsidies and productivity in SMEs

Abstract

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.

Factors affecting outcomes of EU-supported investments in innovation among SMEs in the Greater Poland (Wielkopolska) region, Poland

“…Looking at those, Dmirel et al (2012) and Piras et al (2012) indicated that R&D activities tended to be associated with company growth, further reflected in the higher survival rates (Lee et al, 2015). Karhunen et al (2015) provided evidence for a growth in employment among companies undertaking more R&D activities, and a number of other studies have indicated a positive association with output and productivity (Doraszelski et al, 2013;Hall et al, 2009).…”

Input, Output, and Behavioral Additionality of Innovation Subsidies

“…In the end, this profitability must come from a higher flow of revenues. However, Karhunen and Huovari (Karhunen & Huovari, 2015) show with data from Finland that labor productivity in SMEs seems not to be affected after a subsidy reception, even when this type of policies tends to increase the firms' human capital levels; also, Catozzella and Vivarelli (2011) show with data from Italy that innovation productivity tends to be reduced after subsidy; this could be a result of the innovation cost increase, but also because of the decrease of innovation revenues.…”

“…In recent years, literature has begun to show the long-term effect of subsidies by finding there are greater effects in the long term than those estimated in the short term (Bodas-Freitas et al, 2017;Cin et al, 2017;G. Crespi et al, 2015;Engel et al, 2016;Guo et al, 2016;Howell, 2017;Karhunen & Huovari, 2015;Tello, 2015;Widmann, 2016).…”

The Effectiveness of Regional, National and EU Support for Innovation in the UK and Spain

“…Fifth, firm size also matters although the evidence on this is ambiguous reflecting both selection criteria (which might be biased towards smaller firms) and larger firms' greater propensity to undertake innovation (Aerts and Schmidt 2008; Czarnitzki and Lopes-Bento 2013) 4 . Sixth, foreign-owned firms are less likely to receive public support (Aerts and Schmidt 2008;Czarnitzki and Lopes-Bento 2013) but there is some evidence that firms which are part of a wider enterprise group are more likely to receive public support (Karhunen and Huovari 2015). Finally, there is some evidence that the presence of R&D staff within an enterprise is also linked positively to the receipt of subsidies in smaller Finnish firms (Karhunen and Huovari 2015).…”