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The Impact on Job-Quality of Firm-Level Support to Innovation: Evidence from Natural Experiment Conditions and Linked Employer-Employee Data in Portugal

Author

Listed:
  • Daniele Bondonio
  • Teresa Farinha
  • Ricardo Paes Mamede

Abstract

Public support to firm-level investments in innovation is one of the main mechanisms through which the European Union promotes socioeconomic convergence among regions and the creation of quality jobs is considered a necessary condition for the convergence of disadvantaged regional economies. This paper exploits the availability of natural experiment conditions and linked employer-employee microdata in Portugal to offer empirical evidence on the impact on relevant job-quality outcomes of a large EU-cohesion-policy program to support SMEs’ innovation investments. The analysis is implemented by means of stratification/coarsened exact matching model, combined with a difference in difference scheme, suitable to the specific impact identification conditions. Our results indicate that the policy intervention in Portugal had a positive impact on job-quality outcomes, with each supported firm generating an average of 4.9 additional standard-working-time jobs, +2.9 skilled jobs, and +2.0 permanent-contract jobs, compared to a counterfactual scenario of no public support. These impacts were at a cost of about 16,100€, 27,100€ and 39,400€ in public subsidies per additional job, respectively. We also estimate that the program impact was responsible for a 2.20€ (+17.8%) increase of the per-hour remuneration. These findings are robust to sensitivity analysis, in terms of alternative matching procedures and comparison groups, and they highlight the fact that increasing job-quality is a policy goal that can be pursued, at a reasonable cost, also by means of cohesion-policy support to innovation aimed at enhancing the competitiveness of SMEs. JEL classification: O1; R5; C23

Suggested Citation

  • Daniele Bondonio & Teresa Farinha & Ricardo Paes Mamede, 2022. "The Impact on Job-Quality of Firm-Level Support to Innovation: Evidence from Natural Experiment Conditions and Linked Employer-Employee Data in Portugal," Evaluation Review, , vol. 46(5), pages 626-651, October.
    • Handle: RePEc:sae:evarev:v:46:y:2022:i:5:p:626-651
    DOI: 10.1177/0193841X221074765
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    Keywords

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    JEL classification:

    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • R5 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models

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