Some causal effects of an industrial policy

Chiara Criscuolo, Ralf Martin, Henry Overman and John van Reenen

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

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-codes: E24 G31 H25 L25 L52 R23 (search for similar items in EconPapers)
Pages: 38 pages
Date: 2019-01-01
New Economics Papers: this item is included in nep-eur, nep-geo, nep-ind, nep-mac and nep-reg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (122)

Published in American Economic Review, 1, January, 2019, 109(1), pp. 48-85. ISSN: 0002-8282

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http://eprints.lse.ac.uk/88837/ Open access version. (application/pdf)

Related works:
Journal Article: Some Causal Effects of an Industrial Policy (2019)
Working Paper: Some Causal Effects of an Industrial Policy (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:88837

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