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Do Government Subsidies Stimulate Training Expenditure? Microeconometric Evidence from Plant-Level Data

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  • Holger Görg

    ()
    (School of Economics, University of Nottingham)

  • Eric Strobl

    ()
    (Ecole Polytechnique)

Abstract

This paper examines whether financial assistance provided by government induces firms to spend more of their own funds on training expenditures, using plant-level data for the Republic of Ireland. We pay particular attention to the potential problems in such an evaluation study, namely selectivity and endogeneity, by first identifying a valid counterfactual for grant receiving plants via a matching estimator and then employing a difference-in-differences technique on this matched sample. Our results show that there are differences in causal effects between domestic and foreign-owned plants. For the former, we find clear evidence that grant receipt stimulates private expenditure, whereas there are no statistically significant effects for foreign-owned plants based in Ireland.

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Bibliographic Info

Article provided by Southern Economic Association in its journal Southern Economic Journal.

Volume (Year): 72 (2006)
Issue (Month): 4 (April)
Pages: 860–876

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Handle: RePEc:sej:ancoec:v:72:4:y:2006:p:860-876

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Cited by:
  1. Görlitz, Katja, 2010. "The effect of subsidizing continuous training investments -- Evidence from German establishment data," Labour Economics, Elsevier, Elsevier, vol. 17(5), pages 789-798, October.
  2. Girma, Sourafel & Görg, Holger & Strobl, Eric & Walsh, Frank, 2008. "Creating jobs through public subsidies: An empirical analysis," Labour Economics, Elsevier, Elsevier, vol. 15(6), pages 1179-1199, December.
  3. Juana Rivera-Lirio & María Muñoz-Torres, 2010. "The Effectiveness of the Public Support Policies for the European Industry Financing as a Contribution to Sustainable Development," Journal of Business Ethics, Springer, Springer, vol. 94(4), pages 489-515, July.
  4. Nolan, Anne, 2006. "Evaluating the Impact of Eligibility for Free Care on the Use of GP Services in Ireland: A Difference-in-Difference Matching Approach," Papers, Economic and Social Research Institute (ESRI) HRBWP25, Economic and Social Research Institute (ESRI).
  5. Laia Castany, 2008. "The Role of Firm Size in Training Provision Decisions: evidence from Spain," Economics of Education Working Paper Series, University of Zurich, Institute for Strategy and Business Economics (ISU) 0028, University of Zurich, Institute for Strategy and Business Economics (ISU).

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