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

  • Holger Görg

    ()

    (School of Economics, University of Nottingham)

  • Eric Strobl

    ()

    (Ecole Polytechnique)

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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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
Contact details of provider: Web page: http://www.southerneconomic.org/

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