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Evaluating the impact of firm subsidy using a multilevel propensity score approach

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Author Info

  • Gadd, Håkan

    (Swedish Institute for Growth Policy Studies (ITPS))

  • Hansson, Gustav

    (Swedish Insitute for Growth Policy Studies (ITPS))

  • Månsson, Jonas

    ()
    (Centre for Labour Market Policy Research (CAFO))

Abstract

In this paper, we investigate if firms who received the Regional Development Grant are performing better than firms that did not receive the subsidy. Using data on Swedish stock companies, we firstly estimate a multilevel logit model of the probability of receiving the subsidy. The multilevel approach enables us to adequately take into account the regional context. Secondly, we use propensity score matching to assess the successfulness of the subsidy. The results show that firm characteristics and regional context matters for the probability of receiving the subsidy. Subsidized firms increased their firm size compared to non-subsidized firms’, however; we find no evidence that the subsidized firms have any higher profitability.

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Bibliographic Info

Paper provided by Centre for Labour Market Policy Research (CAFO), School of Business and Economics, Linnaeus University in its series CAFO Working Papers with number 2009:3.

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Length: 25 pages
Date of creation: 20 Jul 2008
Date of revision:
Handle: RePEc:hhs:vxcafo:2009_003

Note: Corresponding Author: Associate Professor Jonas Månsson, jonas.mansson@vxu.se
Contact details of provider:
Postal: Centre for Labour Market Policy Research (CAFO), School of Business and Economics, Linnaeus University, SE 351 95 Växjö, Sweden
Phone: +46 470 70 87 64
Web page: http://lnu.se/research-groups/cafo?l=en
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Related research

Keywords: Subsidy; Policy evaluation; Firm profitability; Employment growth; Regional development; Multilevel; Propensity score matching;

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Cited by:
  1. Andries Brandsma & Pavel Ciaian & d'Artis Kancs, 2013. "The Role of Additionality in the EU Cohesion Policies," JRC-IPTS Working Papers JRC81893, Institute for Prospective and Technological Studies, Joint Research Centre.
  2. Bernini, Cristina & Pellegrini, Guido, 2011. "How are growth and productivity in private firms affected by public subsidy? Evidence from a regional policy," Regional Science and Urban Economics, Elsevier, vol. 41(3), pages 253-265, May.
  3. Michalek, Jerzy & Ciaian, Pavel & Kancs, d'Artis, 2013. "Firm-Level Evidence of Deadweight Loss of Investment Support Policies: A Case Study of Dairy Farms in Schleswig-Holstein," Proceedings Issues, 2013: Productivity and Its Impacts on Global Trade, June 2-4, 2013. Seville, Spain 152258, International Agricultural Trade Research Consortium.
  4. Óscar Afonso & Armando Silva, 2011. "Non-scale endogenous growth effects of subsidies for exporters," FEP Working Papers 429, Universidade do Porto, Faculdade de Economia do Porto.
  5. Jonas MÃ¥nsson & Shahid Quoreshi, 2012. "Evaluating regional cuts in the payroll tax from a firm perspective," ERSA conference papers ersa12p567, European Regional Science Association.

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