Some Causal Effects of an Industrial Policy

Abstract

We exploit changes in the area-specific eligibility criteria for a program to support jobs through investment subsidies. European rules determine whether an area is eligible for subsidies, and we construct instrumental variables for area eligibility based on parameters of these rule changes. Areas eligible for higher subsidies significantly increased jobs and reduced unemployment. A 10-percentage point increase in the maximum investment subsidy stimulates a 10 percent increase in manufacturing employment. This effect exists solely for small firms: large companies accept subsidies without increasing activity. There are positive effects on investment and employment for incumbent firms but not Total Factor Productivity. (JEL E24, G31, H25, L25, L52, R23)

The chosen fortunate in the urbanization process in China? Evidence from a geographic regression discontinuity study

“…The results are quite similar to Criscuolo et al. () that the industrial policy could promote short‐term growth by increasing manufacturing employment. However, the industrial policy itself cannot increase the firms’ productivity.…”

“…This result could explain our findings that the policy has a negative effect on nighttime light in the long term. The results are quite similar to Criscuolo et al (2019) that the industrial policy could promote short-term growth by increasing manufacturing employment. However, the industrial policy itself cannot increase the firms' productivity.…”

“…Combined with the results shown in Section 6.1, the policy increases industrial employment and expanding potential markets in the short term; however, the expansion of enterprises cannot result in the increase of the firms’ total factor productivity level, which is usually regarded as the main source of the long‐term economic growth (Hsieh & Klenow, ). The results are similar to Criscuolo, Martin, Overman, and Van Reenen () that industrial policy cannot directly improve the firms’ efficiency level, and could explain the reason why the long‐term effect of “county‐to‐district” policy on nighttime light is negative.…”

Do place-based tax incentives create jobs?

“…As highlighted in a recent review by Kline and Moretti (2014a), most countries exhibit large and persistent geographical differences in income and employment, and a growing class of place-based policies attempt to reduce these differences through targeting underdeveloped or economically distressed regions. The most prominent and extensively studied place-based policies include enterprise zones such as the Empowerment Zone Program in the U.S. (Busso et al 2013); infrastructure investment such as the Appalachian Regional Commission (Glaeser and Gottlieb 2008) and the Tennessee Valley Authority (Kline and Moretti 2014b) in the U.S. and EU structural funds (Becker et al 2010(Becker et al , 2012 in Europe; and discretionary subsidy policies such as the Regional Selective Assistance program in the UK (Devereux et al 2007;Criscuolo et al 2019). 1 A form of policy that has received less attention in this literature is place-based payroll tax incentives commonly used in Finland, Norway, and Sweden (see Korkeamäki and Uusitalo 2009;Johansen and Klette 1997;.…”

The Role of Political Collusion in Corporate Performance in the Korean Market

“…Profitability is measured by dividing operating profits by the total sales [80]. Greater intangible assets, such as research and development (RD), may be strongly related to a firm's growth and shortand long-term performance, and advertising costs (ADV) may also affect the long-term firm value and performance [71].…”