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R&D Subsidies and Company Performance: Evidence from Geographic Variation in Government Funding Based on the ERDF Population-Density Rule

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  • Elias Einiö

    (VATT (Valtion taloudellinen tutkimuskeskus) and Centre for Economic Performance, London School of Economics)

Abstract

Despite the prevalence of R&D support programs, evaluation studies based on explicit differences in support allocation are rare. In this paper, the identification of the causal effect of R&D support on company performance is based on geographic variation in government funding arising from a population-density rule. I find positive impacts on R&D investment, employment, and sales among the participants who were granted an R&D subsidy as a result of additional aggregate R&D support funding in their region. Although there are no instantaneous impacts on productivity, the study provides evidence of long-term productivity gains. © 2014 The President and Fellows of Harvard College and the Massachusetts Institute of Technology

Suggested Citation

  • Elias Einiö, 2014. "R&D Subsidies and Company Performance: Evidence from Geographic Variation in Government Funding Based on the ERDF Population-Density Rule," The Review of Economics and Statistics, MIT Press, vol. 96(4), pages 710-728, October.
    • Handle: RePEc:tpr:restat:v:96:y:2014:i:4:p:710-728
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    File URL: http://www.mitpressjournals.org/doi/pdf/10.1162/REST_a_00410
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    Keywords

    R&D; geographical variation; government funding; population; population-density; employment; sales;
    All these keywords.

    JEL classification:

    • J40 - Labor and Demographic Economics - - Particular Labor Markets - - - General
    • G17 - Financial Economics - - General Financial Markets - - - Financial Forecasting and Simulation
    • J00 - Labor and Demographic Economics - - General - - - General

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