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Government Grants, Plant Survival and Employment Growth: A Micro-Econometric Analysis

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Author Info

  • Girma, Sourafel

    ()
    (University of Nottingham)

  • Görg, Holger

    ()
    (Kiel Institute for the World Economy)

  • Strobl, Eric

    ()
    (Ecole Polytechnique, Paris)

Abstract

In this paper we analyse the impact of governmental grant provision on plant performance. To this end we utilise rich information derived from three data sources for the manufacturing sector in Ireland, where grant provision has been an important part of the industrial policy. We use a matching technique combined with a difference-in-differences estimator in the empirical analysis. Our results indicate that particularly capital related, but also other types of grants can provide an important impetus to plant survival and employment growth. We also discover some differences in terms of the effectiveness of grants between foreign multinationals and domestic plants. Specifically, while grants have helped to stimulate employment creation in multinationals, they may not always be an effective way of ensuring that these remain in the host country. In contrast, grants have in general been successful in not only helping domestic plants to survive longer, but also to create more jobs.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 838.

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Length: 34 pages
Date of creation: Jul 2003
Date of revision:
Handle: RePEc:iza:izadps:dp838

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Keywords: difference-indifferences; matching; survival; employment; grants; government assistance;

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References

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  1. R. Glenn Hubbard, 1997. "Capital-Market Imperfections and Investment," NBER Working Papers 5996, National Bureau of Economic Research, Inc.
  2. Audretsch, David B, 1991. "New-Firm Survival and the Technological Regime," The Review of Economics and Statistics, MIT Press, vol. 73(3), pages 441-50, August.
  3. Rajeev H. Dehejia & Sadek Wahba, 2002. "Propensity Score-Matching Methods For Nonexperimental Causal Studies," The Review of Economics and Statistics, MIT Press, vol. 84(1), pages 151-161, February.
  4. Agarwal, Rajshree & Audretsch, David B, 2001. "Does Entry Size Matter? The Impact of the Life Cycle and Technology on Firm Survival," Journal of Industrial Economics, Wiley Blackwell, Wiley Blackwell, vol. 49(1), pages 21-43, March.
  5. Heckman, James J & Ichimura, Hidehiko & Todd, Petra E, 1997. "Matching as an Econometric Evaluation Estimator: Evidence from Evaluating a Job Training Programme," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 64(4), pages 605-54, October.
  6. Barry, Frank & Bradley, John, 1997. "FDI and Trade: The Irish Host-Country Experience," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 107(445), pages 1798-1811, November.
  7. Bruce D. Meyer, 1994. "Natural and Quasi- Experiments in Economics," NBER Technical Working Papers, National Bureau of Economic Research, Inc 0170, National Bureau of Economic Research, Inc.
  8. Charles Brown & James L. Medoff, 1988. "The Impact of Firm Acquisitions on Labor," NBER Chapters, National Bureau of Economic Research, Inc, in: Corporate Takeovers: Causes and Consequences, pages 9-32 National Bureau of Economic Research, Inc.
  9. Richard Disney & Jonathan Haskel & Ylva Heden, 2003. "Entry, Exit and Establishment Survival in UK Manufacturing," Journal of Industrial Economics, Wiley Blackwell, Wiley Blackwell, vol. 51(1), pages 91-112, 03.
  10. Holger G�rg & Eric Strobl, 2003. ""Footloose" Multinationals?," Manchester School, University of Manchester, University of Manchester, vol. 71(1), pages 1-19, January.
  11. Gorg, Holger & Strobl, Eric, 2002. "Multinational companies and indigenous development: An empirical analysis," European Economic Review, Elsevier, Elsevier, vol. 46(7), pages 1305-1322, July.
  12. Geroski, P. A., 1995. "What do we know about entry?," International Journal of Industrial Organization, Elsevier, Elsevier, vol. 13(4), pages 421-440, December.
  13. Audretsch, David B & Mahmood, Talat, 1995. "New Firm Survival: New Results Using a Hazard Function," The Review of Economics and Statistics, MIT Press, vol. 77(1), pages 97-103, February.
  14. Richard Blundell & Monica Costa Dias, 2000. "Evaluation methods for non-experimental data," Fiscal Studies, Institute for Fiscal Studies, Institute for Fiscal Studies, vol. 21(4), pages 427-468, January.
  15. Matthias Almus & Susanne Prantl, 2002. "Die Auswirkungen öffentlicher Gründungsförderung auf das Überleben und Wachstum junger Unternehmen," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), Justus-Liebig University Giessen, Department of Statistics and Economics, Justus-Liebig University Giessen, Department of Statistics and Economics, vol. 222(2), pages 161-185.
  16. Ron Jarmin, 1999. "Government Technical Assistance Programs* And Plant Survival: The Role Of Plant Ownership Type," Working Papers, Center for Economic Studies, U.S. Census Bureau 99-2, Center for Economic Studies, U.S. Census Bureau.
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Cited by:
  1. 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.

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