IDEAS home Printed from
   My bibliography  Save this paper

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.

Suggested Citation

  • Gadd, Håkan & Hansson, Gustav & Månsson, Jonas, 2008. "Evaluating the impact of firm subsidy using a multilevel propensity score approach," CAFO Working Papers 2009:3, Linnaeus University, Centre for Labour Market Policy Research (CAFO), School of Business and Economics.
  • Handle: RePEc:hhs:vxcafo:2009_003 Note: Corresponding Author: Associate Professor Jonas Månsson,

    Download full text from publisher

    File URL:
    Download Restriction: no

    References listed on IDEAS

    1. P. A. Riach & J. Rich, 2002. "Field Experiments of Discrimination in the Market Place," Economic Journal, Royal Economic Society, vol. 112(483), pages 480-518, November.
    2. Doris Weichselbaumer, 2004. "Is It Sex or Personality? The Impact of Sex Stereotypes on Discrimination in Applicant Selection," Eastern Economic Journal, Eastern Economic Association, vol. 30(2), pages 159-186, Spring.
    3. Carlsson, Magnus & Rooth, Dan-Olof, 2007. "Evidence of ethnic discrimination in the Swedish labor market using experimental data," Labour Economics, Elsevier, vol. 14(4), pages 716-729, August.
    4. Altonji, Joseph G. & Blank, Rebecca M., 1999. "Race and gender in the labor market," Handbook of Labor Economics,in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 48, pages 3143-3259 Elsevier.
    5. Phelps, Edmund S, 1972. "The Statistical Theory of Racism and Sexism," American Economic Review, American Economic Association, vol. 62(4), pages 659-661, September.
    Full references (including those not matched with items on IDEAS)


    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. repec:taf:regstd:v:50:y:2016:i:9:p:1579-1594 is not listed on IDEAS
    2. Jonas Månsson & A. Quoreshi, 2015. "Evaluating regional cuts in the payroll tax from a firm perspective," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 54(2), pages 323-347, March.
    3. Jerzy Michalek & Pavel Ciaian & D'Artis Kancs, 2016. "Investment Crowding Out: Firm-Level Evidence from Northern Germany," Regional Studies, Taylor & Francis Journals, vol. 50(9), pages 1579-1594, September.
    4. Andries Brandsma & d'Artis Kancs & Pavel Ciaian, 2013. "The Role of Additionality in the EU Cohesion Policies: An Example of Firm-Level Investment Support," European Planning Studies, Taylor & Francis Journals, vol. 21(6), pages 838-853, June.
    5. 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.
    6. Afonso, Oscar & Silva, Armando, 2012. "Non-scale endogenous growth effects of subsidies for exporters," Economic Modelling, Elsevier, vol. 29(4), pages 1248-1257.
    7. Björn Kauder, 2016. "Incorporation of municipalities and population growth: A propensity score matching approach," Papers in Regional Science, Wiley Blackwell, vol. 95(3), pages 539-554, August.
    8. Massimo FLORIO & Emanuela SIRTORI, 2014. "The Evaluation of Research Infrastructures: a Cost-Benefit Analysis Framework," Departmental Working Papers 2014-10, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.
    9. repec:ilo:ilowps:486341 is not listed on IDEAS
    10. Castillo, Victoria. & Ohaco, Moira. & Schleser, Diego., 2014. "Evaluación de impacto en la inserción laboral de los beneficiarios de los cursos sectoriales de formación profesional," ILO Working Papers 994863413402676, International Labour Organization.

    More about this item


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

    JEL classification:

    • C01 - Mathematical and Quantitative Methods - - General - - - Econometrics
    • E20 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - General (includes Measurement and Data)
    • H32 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Firm
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

    NEP fields

    This paper has been announced in the following NEP Reports:


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hhs:vxcafo:2009_003. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Andreas Mångs). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.