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

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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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,
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
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